The total return to stockholders, k_e, is composed of the

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The total return to stockholders is composed of both the dividend yield (the annual dividend paid divided by the current stock price) and the price appreciation of the security (the change in stock price over the year). This is because a stockholder can earn income from both the dividends paid out and the increase in the stock's value over time. Therefore, choice B, dividend yield plus the price appreciation of the security, is the best choice.

The Total Return to Stockholders, Ke, Is Composed of the

The Total Return to Stockholders, K_e, Is Composed of the