Which of the following statements is CORRECT, assuming stocks are in equilibrium?
A. The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.
B. Assume that the required return on a given stock is 13%. If the stock's dividend is growing at a constant rate of 5%, then its expected dividend yield is 5% as well.
C. A stock's dividend yield can never exceed its expected growth rate.
D. A required condition for one to use the constant growth model is that the stock's expected growth rate exceed its required rate of return.
E. Other things held constant, the higher a company's beta coefficient, the lower its required rate of return.
Answer: A
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Answer the following statements true (T) or false (F)
1. An information system is one of the five components by which a company can achieve its internal control objectives. 2. The environment is the culture of a business, and it starts with the CEO or CFO and the top managers. 3. Internal auditors are employees of the business who ensure that employees are following company policies and that operations are running efficiently. 4. External auditors evaluate company controls to ensure the financial statements are presented fairly, in accordance with Generally Accepted Accounting Principles.
A "cash balance" retirement plan is a type of
A) defined benefit plan. B) Social Security plan. C) defined contribution plan. D) annuity.
A merger of Parker Corporation with Jones Corporation that results in only Parker Corporation's surviving normally would require approval of:
a. Parker's and Jones' boards. b. Parker's shareholders. c. Jones' shareholders. d. All of these.
Which of the following statements about covered perils under the personal property coverage (Coverage C) of the Homeowners 3 policy is true?
A) Theft losses to boats and watercraft are covered only if they occur at the insured's residence. B) Damage from an explosion is covered only if the explosion is the result of fire or lightning. C) Property damage from vehicles is covered only if it is caused by the insured. D) Smoke damage is covered only if it arises from agricultural or industrial operations.