The expected return on an equity security is comprised of a:
A)Dividend yield and ROE
B)Current yield and a terminal value
C)Sustainable growth rate and a plowback yield
D)Dividend yield and a capital gains yield

Question

Quizplus · Accepted Answer

The expected return on an equity security is composed of two parts: the dividend yield and the capital gains yield. Dividend yield is the annual dividend payment expressed as a percentage of the stock's current price. Capital gains yield is the expected appreciation in the stock's price. Therefore, the correct choice is D, dividend yield and capital gains yield.

The Expected Return on an Equity Security Is Comprised of A