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26 September, 05:20

A stock's dividend is expected to grow at a constant rate of 5 percent a year. Which of the following statements is most correct?

Select one:

A. The expected return on the stock is 5 percent a year.

B. The stock's dividend yield is 5 percent.

C. The stock's price one year from now is expected to be 5 percent higher.

D. Statements a and c are correct. e. All of the statements above are correct.

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Answers (1)
  1. 26 September, 08:35
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    Option C

    Explanation:

    the correct answer is Option C

    when the stock's dividend is expected to grow at a constant rate of 5 percent per year then the price of the stock expected to be higher by 5% over the span of one year.

    hence, the only option which is correct is option C in which the expected growth is expected to be 5 % after one year.
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