Question

In a 1988 study, Fama and French found that the return on the aggregate stock market was __________ when the dividend yield was higher.A. higherB. lowerC. unaffectedD. more skewed

Answer 1

Answer:

A. higher

Explanation:

Fama And French did the risk factor study on stock, which clearly stated that when there is a high dividend yield then the stocks would perform good even in the market.

thus, this clearly reflects that when the market is high for stock returns then the dividend yield is also high.

This is basically the proportional reaction, as when the stock return is higher whether in terms of value addition or cash returns then only the dividend return would also be higher.

Correct option in this case will be:

A. Higher.