Asked by Maria Arias on Jul 03, 2024
Verified
The return on a share of stock consists of two principal yields:
A) the capital gains yield and the capital appreciation yield.
B) the dividend yield and the capital gains yield.
C) the capital gains yield and the earnings per share.
D) All of the above
Capital Gains Yield
The price appreciation component of the total return on an investment, represented as a percentage of the initial investment cost.
Dividend Yield
The dividend per share divided by the price per share, indicating how much a company pays out in dividends each year relative to its stock price.
- Acquire knowledge of the constituent parts and mathematical operations of the constant growth model used in stock valuation.
- Gain insight into the distinct differences in evaluation and investment priorities between bonds and stocks.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
B
Explanation :
The return on a share of stock is composed of the dividend yield and the capital gains yield. The capital gains yield refers to the increase in the stock's price over time, while the dividend yield represents the payments made by the company to its shareholders. The capital appreciation yield and earnings per share are related to the capital gains yield and are not separate components of return.
Learning Objectives
- Acquire knowledge of the constituent parts and mathematical operations of the constant growth model used in stock valuation.
- Gain insight into the distinct differences in evaluation and investment priorities between bonds and stocks.
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