In the dividend discount model (DDM), the expected return for investors comes from which two sources?
A
Dividend yield and capital gains
B
Capital gains and bond coupon payments
C
Interest income and capital gains
D
Dividend yield and interest income
0 댓글
검증된 단계별 안내
1
Understand the Dividend Discount Model (DDM): The DDM is a method used to value a company's stock by assuming that the stock's value is equal to the present value of all its future dividend payments.
Identify the sources of return for investors in the DDM: The expected return for investors comes from two primary sources: dividend yield and capital gains.
Define dividend yield: Dividend yield is the annual dividend payment divided by the current stock price, representing the income investors receive from dividends.
Define capital gains: Capital gains refer to the increase in the stock's price over time, which investors realize when they sell the stock at a higher price than they purchased it.
Eliminate incorrect options: Bond coupon payments and interest income are not relevant to the DDM, as the model focuses on dividends and stock price appreciation.