If D₀ = $2

question 7

Multiple Choice

If D₀ = $2.25,g (which is constant) = 3.5%,and P₀ = $52,then what is the stock's expected dividend yield for the coming year?

• A) 3.36%
• B) 3.81%
• C) 4.61%
• D) 4.48%
• E) 4.25%

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Stock Holdings

The shares of stock that an individual or institution owns in various companies.

Stock Market

A public market for buying, selling, and trading company shares and securities.

Long-term Real Rate

The interest rate on a long-term loan or investment, adjusted for the effects of inflation, reflecting the real cost of borrowing or the real yield on an investment.