A Stock Is Expected to Pay a Year-End Dividend of $2.00,i.e

question 43

Multiple Choice

A stock is expected to pay a year-end dividend of $2.00,i.e. ,D₁ = $2.00.The dividend is expected to decline at a rate of 5% a year forever (g = -5%) .If the company is in equilibrium and its expected and required rate of return is 15%,then which of the following statements is CORRECT?

• A) The company's current stock price is $20.
• B) The company's dividend yield 5 years from now is expected to be 10%.
• C) The constant growth model cannot be used because the growth rate is negative.
• D) The company's expected capital gains yield is 5%.
• E) The company's expected stock price at the beginning of next year is $9.50.

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Definitions:

Social-learning Framework

A theoretical framework that emphasizes the importance of observing, modeling, and imitating the behaviors, attitudes, and emotional reactions of others.

Rewarded Acts

Rewarded acts refer to behaviors that receive positive reinforcement, which can encourage the repetition of these behaviors due to the rewards received.

Cultural Emphasis

The prioritization of certain beliefs, values, customs, and behaviors within a culture, highlighting the characteristics that are considered most important or central to the group's identity.

Parenting Practices

The behaviors and strategies that parents use to raise their children, including disciplinary tactics, communication styles, and nurturing actions.