If D₀ = $2

question 44

Multiple Choice

If D₀ = $2.25,g (which is constant) = 3.5%,and P₀ = $50,what is the stock's expected dividend yield for the coming year?

• A)4.42%
• B)4.66%
• C)4.89%
• D)5.13%

---

Definitions:

Geometric Average Return

The compounded annual rate of return over time, accounting for the compounding of investment returns.

Arithmetic Average Return

A method of calculating the average return of an investment by simply dividing the sum of all returns by the number of periods.

Dollar-Weighted Return

An investment's return that takes into account the timing and amount of capital inflows and outflows, reflecting the investor's actual experienced rate of return.

Geometric Average Return

is a method of calculating the average rate of return on an investment that accounts for the effects of compounding, typically lower than the arithmetic average return.