Which of the Following Statements Is Correct

question 18

Multiple Choice

Which of the following statements is correct?

• A)The dividend yield on a constant growth stock must be equal to the stock's expected total return less its expected capital gains return.
• 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.

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Definitions:

Market Price

Market price is the current price at which an asset or service can be bought or sold in the open market.

Net Profit Margin

A financial metric that measures the percentage of profit a company earns from its total revenue, indicating efficiency and profitability.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial position.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specified period.