Question

Choose all correct statements.

1.Dividend growth rate is equivalent to the dividend yield.

2.The total return on a stock is equal to the dividend yield plus the capital gains yield.

3.The benchmark PE ratio can be used to value the stock of firms that pay no dividends.

4.Assume the constant dividend growth model. An increase in the capital gains yield will increase the current value of a stock.

Answer #1

(B) total return on a stock is equal to the dividend yield + the Capital yields . it is a combination of the dividend which have been kept by the company and the capital gain which have been earned by the company.

(C) the benchmark price to earning ratio can be used for the valuation of various companies, which will be paying no dividend because the benchmark price to earning ratio is also based upon no dividend, as it is based upon an index value.

Rest of the two statements are not true.

Correct answer is option (B) and option (C)

16. Which of the following statements is CORRECT? (2pts)
a. The constant growth model takes into consideration the
capital gains investors expect to earn on a stock
b. It is appropriate to use the constant growth model to
estimate a stock's value even if its growth rate is never expected
to become constant.
c. If a stock has a required rate of return ke = 12%, and if its
dividend is expected to grow at a constant rate of 5%,...

A stock’s required return is equal to the dividend growth rate
plus the capital gains yield. True or false

1)what are the correct statements.
Group of answer choice:
a)If a security is underpriced, then the expected holding period
return is above the market capitalization rate.
b)The value of the equity equals the present value of all future
payouts (dividends plus repurchases).
c)The value of a share equals the present value of all future
dividends per share.
d)If a firm reinvests its earnings at an ROE equal to the market
capitalization rate, then its earnings-price (E/P) ratio is equal
to...

Which of the following statements is most correct? Select
one:
a. The constant growth model is often appropriate for companies
that the dividend growth rate is larger than its required rate of
return on stock.
b. The constant growth model is often appropriate for companies
that never pay dividend.
c. Two firms with the same dividend and growth rate should have
the same stock price.
d. The constant growth model can be applied to companies that
expect zero dividend growth...

Prove that for a stock with dividends that grow at a constant
rate, the capital gains yield equals the growth rate. (Hint: to
prove the result, remember that the required rate of return is
equal to the capital gains yield plus the dividend yield).

Which of the following statements is most correct?
Select one:
a. The constant growth model is often appropriate for companies
that never pay dividend.
b. The constant growth model is often appropriate for mature
companies with a stable history of growth.
c. Two firms with the same dividend and growth rate must also
have the same stock price.
d. The constant growth model cannot be applied to companies that
expect zero dividend growth rate.
e. The constant growth model is...

Which of the following is not true? Group of answer choices
The dividend growth model seeks to estimate the current market
value of a stock by calculating the total future value of the
future dividend payments.
The dividend growth model cannot be used to estimate the current
market value of stocks of firms that don’t issue any dividends.
There are ways other than the dividend growth model to conduct
stock valuation, including multiplying a benchmark
Price-to-Earnings ratio with earnings per...

The expected return on a stock is comprised of a:
a) dividend yield and a capital gains yield.
b) current yield and a terminal value.
c) dividend yield and ROE.
d) sustainable growth rate and a plowback yield.

Super Carpeting Inc. just paid a dividend ( D0 ) of $1.44, and
its dividend is expected to grow at a constant rate (g) of 2.10%
per year. If the required return ( rs ) on Super’s stock is 5.25%,
then the intrinsic, or theoretical market, value of Super’s shares
is per share. Which of the following statements is true about the
constant growth model? The constant growth model implies that
dividend growth remains constant from now to infinity. The...

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 ( rs ) 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? The
constant growth model can be used if a stock’s expected constant
growth rate is less than...

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