The expected rate of return on a share of common stock whose dividends are growing at a constant rate (g) is which of the following?
A) (D1 + g)/Vc
B) D1/Vc + g
C) D1/g
D) D1/Vc

Question

Quizplus · Accepted Answer

The formula for the expected rate of return on a share of common stock whose dividends are growing at a constant rate (g) is D1/Vc + g. This formula takes into account both the current dividend yield (D1/Vc) and the expected growth rate of the dividends (g) to determine the overall return on the investment. Therefore, the correct answer is B.

The Expected Rate of Return on a Share of Common