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

question 5

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 one 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.

---

Definitions:

Fixed-Ratio

A schedule of reinforcement where a response is reinforced only after a specified number of responses, used in behaviorist theories.

Reinforcer

A stimulus or event that increases the likelihood of the behavior that led to it happening again.

Electric Shock

A sudden discharge of electricity through a part of the body, often used in psychological experiments or as a form of therapy.

Skinner Box

An experimental apparatus created by B.F. Skinner to study animal behavior, particularly the consequences of actions on behavior.