{"id":50797,"date":"2024-04-15T23:15:30","date_gmt":"2024-04-15T23:15:30","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=50797"},"modified":"2024-04-15T23:15:30","modified_gmt":"2024-04-15T23:15:30","slug":"in-expected-rate-of-return-for-constant-growth-stock-price-must-grow-according-to-an-expected-rate-and","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-expected-rate-of-return-for-constant-growth-stock-price-must-grow-according-to-an-expected-rate-and\/","title":{"rendered":"In expected rate of return for constant growth, stock price must grow according to an expected rate and"},"content":{"rendered":"

[amp_mcq option1=”at same price” option2=”at different price” option3=”at yielded price” option4=”at buying price” correct=”option1″]<\/p>\n

The correct answer is: A. at same price.<\/p>\n

The expected rate of return for constant growth is the rate at which the stock price is expected to grow over time. This rate is calculated by taking the dividend yield and adding it to the expected growth rate of earnings per share. The dividend yield is the percentage of the stock price that is paid out in dividends each year. The expected growth rate of earnings per share is the rate at which earnings per share are expected to grow over time.<\/p>\n

The stock price must grow at the same rate as the expected rate of return in order to maintain the same level of expected return. If the stock price grows at a faster rate than the expected rate of return, then the expected return will increase. If the stock price grows at a slower rate than the expected rate of return, then the expected return will decrease.<\/p>\n

Here is a brief explanation of each option:<\/p>\n