Monday, November 11, 2019

High Country Builders currently pays an annual dividend of $1.35 and plans on increasing that amount by 2.5 percent

High Country Builders currently pays an annual dividend of $1.35 and plans on increasing that amount by 2.5 percent each year. Valley High Builders currently pays an annual dividend of $1.20 and plans on increasing its dividend by 3 percent annually. Given this information, you know for certain that the stock of High Country Builders' has a higher ______ than the stock of Valley High Builders. 
 
A. 
market price.

B. 
dividend yield.

C. 
capital gains yield.

D. 
total return.

E. 
The answer cannot be determined based on the information provided.
Refer to section 8.1


27.
The dividend growth model:

I. assumes that dividends increase at a constant rate forever.
II. can be used to compute a stock price at any point in time. 
III. can be used to value zero-growth stocks.
IV. requires the growth rate to be less than the required return. 
 
A. 
I and III only

B. 
II and IV only

C. 
I, III, and IV only

D. 
I, II, and IV only

E. 
I, II, III, and IV
Refer to section 8.1

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