Which of the Following Statements Is CORRECT, Assuming Stocks Are

question 76

Multiple Choice

Which of the following statements is CORRECT, assuming stocks are in equilibrium?

• A) Assume that the required return on a given stock is 13%.If the stock's dividend is growing at a constant rate of 5%, its expected dividend yield is 5% as well.
• B) A stock's dividend yield can never exceed its expected growth rate.
• C) A required condition for one to use the constant growth model is that the stock's expected growth rate exceeds its required rate of return.
• D) Other things held constant, the higher a company's beta coefficient, the lower its required rate of return.
• E) The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.

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