Shares of a Common Stock Offer an Expected Total Return

question 36

Multiple Choice

Shares of a common stock offer an expected total return of 12 percent.What is the dividend yield if the dividend increases by 3 percent annually?

• A)15.00%
• B)3.00%
• C)9.00%
• D)8.74%
• E)15.36%

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Definitions:

MC

Marginal Cost, the change in total cost that arises when the quantity produced changes by one unit.

AVC

Average Variable Cost; the total variable cost divided by the quantity of output produced, representing the variable cost per unit.

ATC

Average Total Cost, the per unit cost of production that includes all fixed and variable costs.

MR

Marginal Revenue, the additional income earned from selling one more unit of a good or service.