If a Stock Is Correctly Priced, Then You Know That

question 89

Multiple Choice

If a stock is correctly priced, then you know that ________.

• A) the dividend payout ratio is optimal
• B) the stock's required return is equal to the growth rate in earnings and dividends
• C) the sum of the stock's expected capital gain and dividend yield is equal to the stock's required rate of return
• D) the present value of growth opportunities is equal to the value of assets in place

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Definitions:

Cost Of Goods Sold

Costs directly involved in the manufacture of products a business sells, specifically labor and materials.

Operating Expenses

Costs associated with the day-to-day functions of a business, excluding costs of goods sold.

Gross Sales

The total sales revenue of a company without any deductions for returns, allowances, or discounts.

Cost Of Goods Sold

The immediate costs associated with manufacturing the products a company markets, including materials and workforce expenses.