If a Stock's Dividend Is Expected to Grow at a Constant

question 33

Multiple Choice

If a stock's dividend is expected to grow at a constant rate of 5% a year,which of the following statements is correct?

• A)The expected return on the stock is 5% a year.
• B)The stock's dividend yield is 5%.
• C)The stock's required return must be equal to or less than 5%.
• D)The stock's price 1 year from now is expected to be 5% above the current price.

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Definitions:

African-Americans

A racial or ethnic group in the United States with ancestry traced to Africa, especially those of Sub-Saharan origin.

Economic Independence

The state of having sufficient personal wealth to live without the need to work for basic necessities, allowing for a self-sustaining lifestyle.

Treaty of Greenville

A 1795 agreement between the United States and Native American tribes in Ohio, marking the end of hostilities and opening up much of present-day Ohio to American settlement.

1795

A year notable for events such as the Treaty of Greenville, which ended the Northwest Indian War in the United States, and the establishment of the Batavian Republic in the Netherlands.