Adding dividend exposure to a portfolio of non-dividend paying stocks will result in the portfolio’s : a) increased returns and increased risk b) decreased returns and increased risk c) decreased returns and decreased risk d) increased returns and decreased risk
Adding dividend exposure to a portfolio of non-dividend paying stocks will result in the portfolio’s : a) increased returns and increased risk b) decreased returns and increased risk c) decreased returns and decreased risk d) increased returns and decreased risk
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Adding dividend exposure to a portfolio of non-dividend paying stocks will result in the portfolio’s :
a) increased returns and increased risk
b) decreased returns and increased risk
c) decreased returns and decreased risk
d) increased returns and decreased risk
Expert Solution
Step 1
There are two types of equity stocks as per their market stand and condition. Dividend-paying stocks and non-dividend-paying stocks. The dividend-paying stocks are usually termed value stocks and the non-dividend paying stocks are called growth stocks as they tend to reinvest their profits for their growth.
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