If a Company's Free Cash Flows Are Expected to Grow

question 9

Multiple Choice

If a company's free cash flows are expected to grow at a constant rate of 5% a year, which of the following statements is CORRECT? The stock is in equilibrium.

• A) The company's stock's dividend yield is 5%.
• B) The value of operations is expected to decline in the future.
• C) The company's WACC must be equal to or less than 5%.
• D) The company's value of operations one year from now is expected to be 5% above the current price.
• E) The expected return on the company's stock is 5% a year.

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Definitions:

Population Variances

A measure of the dispersion or spread of a set of values in a population, reflecting how much the values differ from the population mean.

One-Way ANOVA

A statistical test that compares the means of three or more independent samples to determine if at least one sample mean significantly differs from the others.

Sample Sizes

The number of observations or units in a subset of the population chosen for analysis in a statistical study.

Completely Randomized Design

Completely Randomized Design is an experimental design where subjects are randomly assigned to treatments, ensuring that the treatments are allocated without bias.