Stock X has the following data. Assuming the stock market is efficient and the stock is in equilibrium, which of the following statements is CORRECT?
A) The stock's required return is 10%.
B) The stock's expected dividend yield and growth rate are equal.
C) The stock's expected dividend yield is 5%.
D) The stock's expected capital gains yield is 5%.
E) The stock's expected price 10 years from now is $100.00.

Question

Quizplus · Accepted Answer

In an efficient market, if a stock is in equilibrium, the expected dividend yield and growth rate are equal, as they both contribute to the total expected return.

Stock X Has the Following Data