Which of the following statements is most correct?
Which of the following statements is most correct?
a. Assume that the required rate of return on a given stock is 13 percent. If the stock's dividend is growing at a constant rate of 5 percent, its expected dividend yield is 5 percent as well.
b. The dividend yield on a stock is equal to the expected return less the expected capital gain
c. A stock's dividend yield can never exceed the expected growth rate.
d. All of the answers above are correct.
e. Answers b and c are correct.
Homework Answers
The correct statement is
b.The dividend yield = Expected Return - capital gain
a and c are false
Dividend yield can be higher than growth rate
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