Which of the Following Statements Is CORRECT,assuming Stocks Are in Equilibrium

question 74

Multiple Choice

Which of the following statements is CORRECT,assuming stocks are in equilibrium?

• A)The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.
• B)Assume that the required return on a given stock is 13%. If the stock's dividend is growing at a constant rate of 5%, its expected dividend yield is 5% as well.
• C)A stock's dividend yield can never exceed its expected growth rate.
• D)A required condition for one to use the constant growth model is that the stock's expected growth rate exceeds its required rate of return.
• E)Other things held constant, the higher a company's beta coefficient, the lower its required rate of return.

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Definitions:

Trade Benefit

The advantages a country gains from engaging in international trade, such as access to a wider variety of goods and services, economies of scale, and increased market competition.

Produce Alfalfa

The process of cultivating and harvesting alfalfa, a perennial flowering plant used primarily as fodder for livestock.

Comparative Advantage

The capability of a nation or person to generate a specific product or service with a lesser opportunity cost compared to others.

Trade Benefit

The advantage gained by countries, companies, or individuals from engaging in international trade, including increased economic output, efficiency, and consumer choice.