The expected rate of return on a share of common stock whose dividends are growing at a constant rate (g)is which of the following? A)(D₁ + g)/Vc B)D₁/Vc + g C)D₁/g D)D₁/Vc

Question

Quizplus · Accepted Answer

The expected rate of return on a share of common stock whose dividends are growing at a constant rate (g) is calculated using the constant growth dividend discount model, which is DS1U1B11S1U1B0/Vc + g. This formula considers the current dividend (DS1U1B11S1U1B0), the expected future dividend (DS1U1B11S1U1B1), the required rate of return on equity (Vc), and the constant growth rate (g). Therefore, option B is the correct choice.

The Expected Rate of Return on a Share of Common