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castortr0y [4]
3 years ago
7

A stock's dividend is expected to grow at a constant rate of 5% a year, which of the following statements is CORRECT? The stock

is in equilibrium. a. The stock's price one year from now is expected to be 5% above the current price. b. The stock's dividend yield is 5%. c. The stock's required return must be equal to or less than 5%. d. The expected return on the stock is 5% a year.
Business
1 answer:
Llana [10]3 years ago
7 0

Answer:

a. The stock's price one year from now is expected to be 5% above the current price.

Explanation:

Under gordon model:

\frac{divends}{return-growth} = Intrinsic \: Value

If we calculate the value of the stock for the year after that:

\frac{divends x (1 + growth)}{return-growth} = Intrinsic \: Value

to calculate the value of the increase we divide next year over current year.

\frac{divends(1+growth)}{return-growth} \div \frac{divends}{return-growth}\\\\\frac{divends(1+growth)}{return-growth} \times\frac{return-growth}{divends}\\\\\frac{divends(1+growth)}{divends}= 1+ growth

We have demostrate that next year stock should increase by 1 + growth so statement c is correct.

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Answer: The correct answer is "recorded in equity recorded in equity, as part of other comprehensive income.".

Explanation: Gains or losses on cash flow hedges are <u>recorded in equity, as part of other comprehensive income.</u>

<u>The gains or losses of a cash flow hedge must be recorded, as part of other comprehensive income, in equity.</u>

7 0
3 years ago
Timothy is a construction worker in one of the leading firms of a city. His employment contract includes a clause that says he c
podryga [215]

Answer:

A clause that says Timothy (A construction worker) cannot work as a construction worker within the city for fifteen years once he leaves the company  is Legal because the employer can add any constraint to the agreement.

Explanation:

The provisions of employment contracts usually include an explanation of compensation, penalties and in peculiar cases post-employment clause.

Post-employment clause usually comes with additional benefits like payment of severance.

Enforcing an employment contract varies according to state laws. For this reason, before entering into a written employment contract, clean employee has to be clear on the terms and provisions of the contract because once you append your signature to any provision stipulated by the employer in the contract, it is binding.

Post-employment restrictive covenants are only useful to the employer if they can be enforced. Continued payment of severance often provides the employer with leverage when trying to enforce restrictive covenants in an employer's contract.  

Generally, the employer and employee must be in compliance with the employment contract.

5 0
3 years ago
Banks and other financial institutions of an economy are in the business of channeling funds from suppliers of financialcapital
ziro4ka [17]

Answer:

C. financial intermediation.

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A financial intermediary also helps in facilitating the diverse needs of lenders and borrowers

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6 0
3 years ago
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The elasticity of demand for a product is likely to be greater Group of answer choices if the product is an imported good rather
Lapatulllka [165]

Answer:

the larger the number of substitute products available.

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for a good with many substitutes, if the price of the good increases, consumers can easily shift to the consumption of substitutes. so, the change in price leads to a greater change in quantity demanded.

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3 years ago
Amount of a product offered for sale at all possible market prices
Rama09 [41]

Answer:

Supply

Explanation:

Supply is the economic term that describes the amount of a product that firms as willing to sell at different price levels. The price of the product plays a major role in determining the quantity of supply. As per the law of supply, the higher the price, the higher the quantity firms will be willing to supply.

Although the price affects supply, several other such as the price of related goods, cost of inputs, production technology, and government factors influence supply. Supply can be associated with a specific price, or all possible prices, as illustrated in a supply curve.

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