Which of the Following Statements Is Correct About a Stock

Which of the following statements is correct about a stock currently selling for $50 per share that has a 16 percent expected return and a 10 percent expected capital appreciation?

A) Its expected dividend exceeds the actual dividend
B) Its expected return will exceed the actual return
C) It is expected to pay $3 in annual dividends
D) It is expected to pay $8 in annual dividends Expected return = expected dividend yield + expected capital appreciation
16% = expected dividend yield + 10%
6% = expected dividend yield

Correct Answer:

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