Which one of the following must equal zero if a firm pays a constant annual dividend?

Question

Quizplus · Accepted Answer

If a firm pays a constant annual dividend, the dividend yield will remain constant. The total return would be the sum of the dividend yield and the capital gains yield. Therefore, if the dividend yield is constant, the capital gains yield must equal zero in order for the total return to remain constant. The market value per share and book value per share may or may not be affected by the payment of a constant dividend.

Which One of the Following Must Equal Zero If a Firm