The Required Return on Mountain Brook Stock Is 13

question 64

Multiple Choice

The required return on Mountain Brook stock is 13.8 percent and the dividend growth rate is 3.64 percent.The stock is currently selling for $32.80 a share.What is the dividend yield?

• A)10.16 percent
• B)8.93 percent
• C)11.75 percent
• D)10.50 percent
• E)13.36 percent

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Definitions:

Volatility

A statistical measure indicating the tendency of a market or security's price to rise or fall sharply within a short period.

Period

A duration of time used for financial or operational evaluation.

Risk Premium

The extra return expected by investors for taking on additional risk compared to a risk-free asset.

Securities Categories

Classifications of financial instruments based on their characteristics, such as stocks, bonds, and derivatives.