Assume that the stock is in equilibrium

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Stock X is expected to pay a dividend of $2.00 at the end of the year. The dividend is expected to grow at a constant rate of 4% a year. The stock currently trades at a price of $35 a share. Assume that the stock is in equilibrium. Which of the following statements is most correct? A. The required return on the stock is 8%. B. The stock’s expected capital gains yield is 4%. C. The stock’s dividend yield is 7%. D. Statements a and b are correct. E. All of the statements above are correct.

Reference no: EM13917910

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