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Question
If a stock's dividend is expected to grow at a constant rate of 5% a year, which of the following statements is CORRECT? The stock is in equilibrium.a. The stock's dividend yield is 5%.
b. The price of the stock is expected to decline in the future.
c. The stock's required return must be equal to or less than 5%.
d. The stock's price one year from now is expected to be 5% above the current price.
e. The expected return on the stock is 5% a year.
Answer
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Which of the following is not correct for a firm with seasonal sales and customers who all pay promptly at the end of 30 days?
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