Stock Valuation

Dividend Yield

Next year's annual dividend divided by the current stock price is called the

Dividends

Payments made by a corporation to its shareholders, in the form of either cash, stock or payments in kind, are called:

I and II only

The constant 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 of time. III. states that the market price of a stock is only affected by the amount of the dividend. IV. considers capital gains but ignores the dividend yield.

capital gains

The rate at which a stock's price is expected to appreciate (or depreciate) is called the _____ yield.

Dividend Growth Model

The stock valuation model that determines teh current stock price by dividing the next annual dividend amount by the excess of the discount rate less the dividend growth rate is called the ____ model

III and IV only

The total rate of return earned on a stock is comprised of which two of the following? I. current yield II. yield to maturity III. dividend yield IV. capital gains yield

the expected future dividends, capital gains and the discount rate.

The value of common stock today depends on:

The underlying assumption of the dividend growth model is that a stock is worth:

the present value of the future income which the stock generates