Asked by Suzanna Mondragon on Jul 26, 2024
Verified
The total rate of return on a stock can be positive even when the price of the stock depreciates because of the:
A) Capital appreciation.
B) Interest yield.
C) Dividend yield.
D) Supernormal growth.
E) Real rate of return.
Dividend Yield
A measure of financial performance showing the annual dividends issued by a company relative to its stock price.
Stock Depreciates
Occurs when the market value of a stock decreases over time due to various factors such as poor company performance or market downturns.
- Ascertain the dividend yield and its role in the assessment of stock value.
- Identify the variables affecting the valuation of stocks, such as the market's rate of return and the rate at which dividends grow.
Verified Answer
SG
Shelby GarnerAug 01, 2024
Final Answer :
C
Explanation :
The total rate of return on a stock can still be positive through the dividend yield, even if the stock's price decreases. This is because dividends provide a return to the investor independent of the stock's price movements.
Learning Objectives
- Ascertain the dividend yield and its role in the assessment of stock value.
- Identify the variables affecting the valuation of stocks, such as the market's rate of return and the rate at which dividends grow.