An Investor Who Requires an 18% Percent Return for a Stock

question 26

True/False

An investor who requires an 18% percent return for a stock that pays no dividends and requires a 12% return for a stock that pays its entire return from dividends may be following the bird-in-the-hand dividend theory.

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Definitions:

Inventory Turnover

A figure representing the number of times a business's stock is sold and restocked during a certain period.

Debt Ratio

A financial ratio that measures the proportion of a company’s total debt to its total assets, indicating the degree of leverage and financial risk.

Days' Sales in Inventory

A financial metric indicating the average number of days it takes for a company to turn its inventory into sales.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.