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

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Definitions:

Two-Factor Theory

A psychological theory proposing that emotions are composed of two factors: physiological arousal and cognitive interpretation.

Physical Arousal

The bodily response to stimuli, characterized by increased physiological activity, including heart rate, blood pressure, and energy levels.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for physical activity by triggering the "fight or flight" response.

Salivation

The involuntary production of saliva in the mouth, which can be stimulated by the anticipation of food or the presence of something to chew.