Returns from the overall market (or an individual stock) can be thought of as a combination of three factors: earnings growth, multiple expansion (or contraction), and dividend yield.

Question

Quizplus · Accepted Answer

This statement is true. Earnings growth refers to the increase in a company's earnings over time, which can lead to an increase in the stock's value. Multiple expansion (or contraction) refers to changes in the price-to-earnings (P/E) ratio of a stock, which can also affect its value. Dividend yield is the annual dividend payment divided by the stock price, and can provide income to investors as well as affect the stock's value. Thus, these three factors can all contribute to returns in the stock market.

Returns from the Overall Market (Or an Individual Stock) Can