The discount rate can be thought of as the sum of what two parts?
A) ROE, retention ratio.
B) Dividend yield, growth rate in dividends.
C) Price, growth rate in dividends.
D) Dividend yield, price.
E) ROA, ROE.

Question

Quizplus · Accepted Answer

The discount rate, especially in the context of the Dividend Discount Model (DDM), can be thought of as the sum of the dividend yield and the growth rate in dividends. This reflects the expected return from both the income (dividends) and capital gains (growth in dividends) components of an investment.

The Discount Rate Can Be Thought of as the Sum