An Investor Who Requires a 12% Percent Return for a Stock

question 115

Multiple Choice

An investor who requires a 12% percent return for a stock that pays no dividends and requires a 9% return for a stock that pays its entire return from dividends is most likely a proponent of

• A) the bird-in-the-hand dividend theory.
• B) the residual dividend theory.
• C) the clientele effect.
• D) the information effect.

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Definitions:

Mental Retardation

An outdated and insensitive term formerly used to describe individuals with below-average intellectual functioning and significant limitations in adaptive behaviors; now more commonly referred to as intellectual disability.

Giftedness

The possession of natural talents or abilities at levels significantly higher than average.

IQ

Intelligence Quotient, a measure of a person's intellectual abilities in relation to their age group, typically assessed through standardized testing.

Arnold Gesell

An American psychologist and pediatrician known for his pioneering work in child development and promoting the concept that child growth unfolds predictably and sequentially in several domains.