Stock X is expected to pay a dividend of $3.00 at the end of the year, i.e., D1 = $3.00, and that dividend is expected to grow at a constant rate of 6% a year. The stock currently trades at a price of $50 a share. Assume that the stock is in equilibrium, that is, the stock's price equals its intrinsic value.
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%.
Correct Answer:
Verified
Q17: Stock A has a required return of
Q21: Stock A has a beta of 1.1
Q23: Companies can issue different classes of common
Q23: Stocks X and Y sell at the
Q25: Which of the following statements is correct?
A)The
Q30: Why is the preemptive right important to
Q30: Which of the following statements best describes
Q31: The expected return on Northeast Corporation's stock
Q31: Which of the following statements best describes
Q32: Which of the following statements is correct?
A)The
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents