Homework Answers
Answer: Option b is correct
Share value= Annual Dividends/ Required Rate of Return
If the required return increased, it means that the share price has
decreased.
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For XYZ Corp. paying a constant annual dividend, its required return increased. Which is true for...
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for...
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for ABC Corp.: 1. Its dividend yield to decrease Its dividend yield to increase Its capital gains yield to decrease Its capital gains yield to increase III. IV. Select one: a. ll only O b. II and IV only O c. I and III only d. I only
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for...
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for ABC Corp.: I. Its dividend yield to decrease II. Its dividend yield to increase III Its capital gains yield to decrease IV. Its capital gains yield to increase Select one: a. I only b. I and IlIl only c. Il and IV only d. Il only
SCI just paid a dividend (Do) of $2.88 per share, and its annual dividend is expected...
SCI just paid a dividend (Do) of $2.88 per share, and its annual dividend is expected to grow at a constant rate (g) of 6.00% per year. If the required return (rs) on SCI's stock is 15.00%, then the intrinsic value of scis shares is per share. Which of the following statements is true about the constant growth model? O When using a constant growth model to analyze a stock, if an increase in the growth rate occurs while the...
1. According to the constant dividend growth model, which of the following is true A. the...
1. According to the constant dividend growth model, which of the following is true A. the dividend yield is the same as the capital gains yield. B. the constant growth rate is the same as the dividend yield. C. the capital gains yields is the same as the constant dividend growth rate. D. The price growth rate is the same as the dividend yield. 2. Which of the following is true about stock returns? A. the dividend yield must always...
Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at...
Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at a constant rate (g) of 6.50% per year. If the required return (rss) on SCI’s stock is 16.25%, then the intrinsic value of SCI’s shares is per share. Which of the following statements is true about the constant growth model? When using a constant growth model to analyze a stock, if an increase in the required rate of...
Which of the following statements is CORRECT? a. A non-dividend paying stock will decline in price...
Which of the following statements is CORRECT? a. A non-dividend paying stock will decline in price over time. b. A non-constant growth stock whose growth rate decreases will decline in price over time. c. A constant growth stock whose growth rate is negative will increase in price over time. d. A constant growth stock whose growth rate is negative will remain at the same price over time. e. A constant growth stock whose growth rate is negative will decline in...
The required return is defined as: Select one: O a. Next year's dividend divided by the...
The required return is defined as: Select one: O a. Next year's dividend divided by the current price. b. The rate at which a stock increases in value. c. The payment by a corporation to shareholders in the form of cash or stock. D d. The increase in the value of a share of stock over a period of time. e. The capital gains yield plus the dividend yield.
5. Constant growth stocks Aa Aa SCI just paid a dividend (Do) of $1.44 per share,...
5. Constant growth stocks Aa Aa SCI just paid a dividend (Do) of $1.44 per share, and its 3.00% per year. If the required return (r.) on SCI's stock is 7.50%, then the intrinsic value of SCI's shares is annual dividend is expected to grow at a constant rate (g) of per share. Which of the following statements is true about the constant growth model? O When using a constant growth model to analyze a stock, if an increase in...
The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a...
The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a required rate of return of 12 percent. Compute the price of the preferred stock.
6. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numerator....
6. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numerator. Dividends are divided by the difference between the required return and dividend growth rate as follows Pr 9) Which of the following statements best describes how a change in a firm's stock price would affect a stock's capital gains yield? O The capital gains yield on a stock that the investor already owns has a direct relationship with the firm's expected future stock price....
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for ABC Corp.: 1. Its dividend yield to decrease Its dividend yield to increase Its capital gains yield to decrease Its capital gains yield to increase III. IV. Select one: a. ll only O b. II and IV only O c. I and III only d. I only
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for ABC Corp.: I. Its dividend yield to decrease II. Its dividend yield to increase III Its capital gains yield to decrease IV. Its capital gains yield to increase Select one: a. I only b. I and IlIl only c. Il and IV only d. Il only
SCI just paid a dividend (Do) of $2.88 per share, and its annual dividend is expected to grow at a constant rate (g) of 6.00% per year. If the required return (rs) on SCI's stock is 15.00%, then the intrinsic value of scis shares is per share. Which of the following statements is true about the constant growth model? O When using a constant growth model to analyze a stock, if an increase in the growth rate occurs while the...
1. According to the constant dividend growth model, which of the following is true A. the dividend yield is the same as the capital gains yield. B. the constant growth rate is the same as the dividend yield. C. the capital gains yields is the same as the constant dividend growth rate. D. The price growth rate is the same as the dividend yield. 2. Which of the following is true about stock returns? A. the dividend yield must always...
Which of the following statements is CORRECT? a. A non-dividend paying stock will decline in price over time. b. A non-constant growth stock whose growth rate decreases will decline in price over time. c. A constant growth stock whose growth rate is negative will increase in price over time. d. A constant growth stock whose growth rate is negative will remain at the same price over time. e. A constant growth stock whose growth rate is negative will decline in...
The required return is defined as: Select one: O a. Next year's dividend divided by the current price. b. The rate at which a stock increases in value. c. The payment by a corporation to shareholders in the form of cash or stock. D d. The increase in the value of a share of stock over a period of time. e. The capital gains yield plus the dividend yield.
5. Constant growth stocks Aa Aa SCI just paid a dividend (Do) of $1.44 per share, and its 3.00% per year. If the required return (r.) on SCI's stock is 7.50%, then the intrinsic value of SCI's shares is annual dividend is expected to grow at a constant rate (g) of per share. Which of the following statements is true about the constant growth model? O When using a constant growth model to analyze a stock, if an increase in...
6. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numerator. Dividends are divided by the difference between the required return and dividend growth rate as follows Pr 9) Which of the following statements best describes how a change in a firm's stock price would affect a stock's capital gains yield? O The capital gains yield on a stock that the investor already owns has a direct relationship with the firm's expected future stock price....
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