The Discount Rate in Equity Valuation Is Composed Entirely Of

question 41

Multiple Choice

The discount rate in equity valuation is composed entirely of:

• A) the dividends paid and the capital gains yield.
• B) the dividend yield and the growth rate.
• C) the dividends paid and the growth rate.
• D) the capital gains earned and the growth rate.
• E) the capital gains earned and the dividends paid.

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Definitions:

Equilibrium Level

The state in which market supply and demand balance each other, resulting in stable prices and quantities.

Market Mechanism

The process through which supply and demand interact to determine the prices and allocation of goods and services in a market economy.

Shortage

A situation where the demand for a product or service exceeds the supply available at a specific price.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market equilibrium.