Assuming G Will Remain Constant,the Dividend Yield Is a Good

question 30

Multiple Choice

Assuming g will remain constant,the dividend yield is a good measure of the required return on a common stock under which of the following circumstances?

• A) g = 0.
• B) g > 0.
• C) g < 0.
• D) Under no circumstances.
• E) Answers a and b are both correct.

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Definitions:

Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a change in its price or other economic factors.

Demand

The desire of purchasers, consumers, or clients for a particular good or service, coupled with the ability and willingness to pay for it.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded for a given period.

Elastic

Describes a situation in which the supply or demand for a good or service significantly changes in response to price changes.