Which of the Following Statements Is Correct About a Stock

question 111

Multiple Choice

Which of the following statements is correct about a stock currently selling for $50 per share that has a 16 percent expected return and a 10 percent expected capital appreciation?

• A)Its expected dividend exceeds the actual dividend
• B)Its expected return will exceed the actual return
• C)It is expected to pay $3 in annual dividends
• D)It is expected to pay $8 in annual dividends Expected return = expected dividend yield + expected capital appreciation
• 16% = expected dividend yield + 10%
• 6% = expected dividend yield

---

Definitions:

Qualitative Data

Non-numerical information that describes qualities or characteristics of what is being studied.

Mean

The arithmetic average of a set of numbers, calculated by adding them together and dividing by the number of terms in the set.

Central Tendency

A statistical measure that identifies a single value as representative of a distribution of data, often summarized by the mean, median, or mode.

Measures Central Tendency

Statistics that describe the center of a data distribution, including mean, median, and mode.