Which One of the Following Statements Is Correct Related to the Dividend

question 84

Multiple Choice

Which one of the following statements is correct related to the dividend growth model approach to computing the cost of equity?

• A)The rate of growth must exceed the required rate of return.
• B)The rate of return must be adjusted for taxes.
• C)The annual dividend used in the computation must be for year 1 if you are using today's stock price to compute the return.
• D)The cost of equity is equal to the return on the stock plus the risk-free rate.
• E)The cost of equity is equal to the return on the stock multiplied by the stock's beta.

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Definitions:

Flat Affect

A severe reduction in emotional expressiveness, often characterized by a lack of facial expressions or intonation in speech.

Apathy

A lack of interest, enthusiasm, or concern about anything or the absence of any wish to do anything, often observed as a symptom in various psychological disorders.

Loss of Motivation

A decrease or absence in the desire or willingness to perform actions or achieve goals, often associated with depression or other mental health issues.

Hypochondriasis

An anxiety disorder characterized by excessive preoccupation with the belief of having a serious, undiagnosed medical illness.