In the Constant Growth Model, the Return on a Stock

question 59

Multiple Choice

In the constant growth model, the return on a stock can be shown to be equal to the sum of the dividend yield plus the:

• A)growth rate.
• B)cost of capital.
• C)present value yield.
• D)yield-to-maturity.

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Definitions:

Fixed Maturity Date

A specific date on which the principal (or face value) of a financial instrument is due to be repaid.

Financial Institution

A business that provides financial services such as loans, deposits, payments, and investment products to its customers.

Advances and Loans

Financial assistance provided by a lender to a borrower, where the amount is expected to be repaid with or without interest.

Net Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.