JUJU's Dividend Next Year Is Expected to Be $5

question 24

Multiple Choice

JUJU's dividend next year is expected to be $5.50. It is trading at $45 and is expected to grow at 4 percent per year. What is JUJU's dividend yield and capital gain?

• A) 2.5 percent; 6 percent
• B) 12.22 percent; 4 percent
• C) 4 percent; 12.22 percent
• D) 6 percent; 2.5 percent

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Definitions:

Coupon Bond

A type of bond that pays the holder a fixed interest payment (coupon) at regular intervals until the maturity date, at which point the principal is repaid.

Maturity

The date on which a debt must be paid back in full or the final payment is due.

Price Sensitivity

The degree to which the price of a product or service affects consumers' purchasing decisions.

Interest Rates

The cost of borrowing money or the return earned from lending money, expressed as a percentage of the principal.