Vegan Delite Stock Is Valued at $124

question 92

Multiple Choice

Vegan Delite stock is valued at $124.20 a share.The company pays a constant annual dividend of $8.80 per share.What is the total return on this stock?

• A)6.62 percent
• B)7.00 percent
• C)7.09 percent
• D)7.49 percent
• E)7.82 percent

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Definitions:

Degree Of Total Leverage

A measure that quantifies the sensitivity of a company's earnings before interest and taxes to a change in its sales.

Financial Leverage

The use of borrowed capital or debt to increase the potential return of an investment.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, indicating the extent to which a company can increase its profits by increasing sales.

Modigliani-Miller Model

A foundational financial theory proposing that the market value of a company is determined by its earning power and risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends.