Stock X has the following data. Assuming the stock market is efficient and the stock is in equilibrium, which of the following statements is CORRECT?
Expected dividend, D1$3.00
Current Price, P0$50
Expected constant growth rate6.0%
A. The stock's expected dividend yield and growth rate are equal.
B. The stock's expected dividend yield is 5%.
C. The stock's expected capital gains yield is 5%.
D. The stock's expected price 10 years from now is $100.00.
E. The stock's required return is 10%.
Answer: A
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