Which of the following statements is true? From a practical perspective, the growth rate in the...
Which of the following statements is true?
From a practical perspective, the growth rate in the constant growth dividend model must be greater than the sum of the long-term rate of inflation and the long-term real growth rate of the economy.
In order for the constant growth dividend model to properly value a firm’s common stock, g must be greater than R.
The constant growth dividend model can be used effectively to value the common shares of a mixed growth stock.
In order for the constant growth dividend model to properly value a firm’s common stock, R must be greater than g.
Homework Answers
The true statement is:-
In order for the constant growth dividend model to properly value a firm's common stock, R must be greater than g.
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Which of the following statements is true?
From a practical perspective, the growth rate in the...
. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numerator....
. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numerator. Dividends are divided by the difference between the required return and dividend growth rate as follows: Pˆ0P̂0 = = D1(rs – g)D1(rs – g) Which of the following statements best describes how a change in a firm’s stock price would affect a stock’s capital gains yield? The capital gains yield on a stock that the investor already owns has an inverse relationship with the firm’s...
For the constant growth rate dividend model to work, which of the following assumptions must hold?...
For the constant growth rate dividend model to work, which of the following assumptions must hold? The growth rate must be less than the required rate of return. The growth rate must be greater than the required rate of return. The growth rate should always be equal to zero. The growth rate must be equal to the required rate of return.
the constant growth dividend model requires which of the following conditions? a) G < r b)...
the constant growth dividend model requires which of the following conditions? a) G < r b) R > G c) g is lower than, or equal to, the growth rate of economy d) A and C e) all the above
Which of the following statements is true about the general dividend valuation model? It implies that...
Which of the following statements is true about the general dividend valuation model? It implies that the value of a firm’s common stock can be determined only if the expected future dividends are infinite. The model cannot be used to calculate the value of a common stock unless the dividends exceed the firm’s expected growth rate. It implies that the underlying value of a share of stock is determined by the market’s expectations of the future dividends that the firm...
7. Which of the following is an assumption of the dividend growth model? a. The current...
7. Which of the following is an assumption of the dividend growth model? a. The current dividend divided by 1+g equals the next dividend. b. G must be greater than R. c. The stock must pay dividends. d. Both price and dividend will grow at Rindefinitely e. The price and dividend will increase gradually over the years. 8. A stock with a dividend yield of 5% and a total yield of 11% a. Must be growing at 4%. b. Must...
7. Which of the following is an assumption of the dividend growth model? a. The current...
7. Which of the following is an assumption of the dividend growth model? a. The current dividend divided by 1+g equals the next dividend. b. G must be greater than R. c. The stock must pay dividends. d. Both price and dividend will grow at Rindefinitely e. The price and dividend will increase gradually over the years. 8. A stock with a dividend yield of 5% and a total yield of 11% a. Must be growing at 4%. b. Must...
1. According to the constant dividend growth model, which of the following is true A. the...
1. According to the constant dividend growth model, which of the following is true A. the dividend yield is the same as the capital gains yield. B. the constant growth rate is the same as the dividend yield. C. the capital gains yields is the same as the constant dividend growth rate. D. The price growth rate is the same as the dividend yield. 2. Which of the following is true about stock returns? A. the dividend yield must always...
Question 25 Which of the following statements regarding the Discounted Dividend Model is false? Companies who...
Question 25 Which of the following statements regarding the Discounted Dividend Model is false? Companies who do not pay regular dividends should use a different valuation model. The growth rate can equal the required rate of return on stock in the equation. The required rate of return on stock must be greater than the growth rate in the equation. The growth rate is expected to be constant forever.
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1....
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1. One simple method of estimating the dividend growth rate is to analyze the historical paltem of dividends II. The expected total return equals the return from capital gains plus the return from dividends TIL. The model is applicable to growth firms with initially high growth rates. IV. The intrinsic value calculated using this method can change from one investor to another if their risk-return...
The dividend growth model equates a stock’s intrinsic value (theoretical price) to the discounted sum of...
The dividend growth model equates a stock’s intrinsic value (theoretical price) to the discounted sum of the constant growth dividend stream. The relationship between the dividend growth rate (g) and the discount rate (r) is very important. Which statement accurately describes that relationship? Select one: a. I When g equals zero percent then the stocks intrinsic value is equal to div/r. b. II When g exceeds r then the stock’s intrinsic value is negative, meaning the stock is worthless c....
7. Which of the following is an assumption of the dividend growth model? a. The current dividend divided by 1+g equals the next dividend. b. G must be greater than R. c. The stock must pay dividends. d. Both price and dividend will grow at Rindefinitely e. The price and dividend will increase gradually over the years. 8. A stock with a dividend yield of 5% and a total yield of 11% a. Must be growing at 4%. b. Must...
7. Which of the following is an assumption of the dividend growth model? a. The current dividend divided by 1+g equals the next dividend. b. G must be greater than R. c. The stock must pay dividends. d. Both price and dividend will grow at Rindefinitely e. The price and dividend will increase gradually over the years. 8. A stock with a dividend yield of 5% and a total yield of 11% a. Must be growing at 4%. b. Must...
1. According to the constant dividend growth model, which of the following is true A. the dividend yield is the same as the capital gains yield. B. the constant growth rate is the same as the dividend yield. C. the capital gains yields is the same as the constant dividend growth rate. D. The price growth rate is the same as the dividend yield. 2. Which of the following is true about stock returns? A. the dividend yield must always...
Question 25 Which of the following statements regarding the Discounted Dividend Model is false? Companies who do not pay regular dividends should use a different valuation model. The growth rate can equal the required rate of return on stock in the equation. The required rate of return on stock must be greater than the growth rate in the equation. The growth rate is expected to be constant forever.
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1. One simple method of estimating the dividend growth rate is to analyze the historical paltem of dividends II. The expected total return equals the return from capital gains plus the return from dividends TIL. The model is applicable to growth firms with initially high growth rates. IV. The intrinsic value calculated using this method can change from one investor to another if their risk-return...
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