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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 $3.00Current Price, P0 $50Expected constant growth rate 6.0%a. The stock’s required return is 10%.b. The stock’s expected dividend yield and growth rate are equal.c. The stock’s expected dividend yield is 5%.d. The stock’s expected capital gains yield is 5%.e. The stock’s expected price 10 years from now is $100.00.

Respuesta :

The stock’s expected dividend yield and growth rate are equal

The annualized percentage rate of growth in a stock's dividend over time is known as its dividend growth rate.Many well-established companies strive to increase their dividend payments to investors on a regular basis. For dividend discount models, which are stock valuation models, the dividend growth rate is a key input.  The annualised average rate of increase in a company's dividend payments is calculated using dividend growth. When utilising a dividend discount model to value equities, the dividend growth rate must be calculated. Strong dividend growth in the past may indicate future dividend increase is probable, which can indicate long-term profitability.

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