We Have Collected Price Per Share and Dividend Information from a Sample

question 86

Multiple Choice

We have collected price per share and dividend information from a sample of 30 companies.
The slope in this instance indicates:

• A) For each additional dollar in stock price, we can anticipate an additional $2.73 in dividend
• B) For each additional dollar in stock price, we can anticipate an additional $3.68 in dividend
• C) For each additional dollar in stock price, we can anticipate an additional $0.27 in dividend
• D) For each additional dollar in dividend, we can anticipate an additional $2.71 in stock price
• E) For each additional dollar in dividend, we can anticipate a drop of $3.68 in stock price

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Definitions:

Arbitrage Opportunity

A situation where a trader can profit from differences in price of the same asset in different markets by simultaneously buying and selling it.

Profit

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Risk-free Rate

The theoretical return on investment with no risk of financial loss, often represented by the yield on government securities.