Which of the following is not correct regarding the constant growth dividend discount model? Group of...
Which of the following is not correct regarding the constant growth dividend discount model?
Group of answer choices
The model is based on the dividend one year from the valuation period.
The model requires that the required return be greater than or equal to the growth rate of the dividend.
The model can be rearranged to determine the payout ratio.
All of the above are true.
Homework Answers
Incorrect statement regarding the constant growth dividend discount model is:-
The model can be rearranged to determine the payout ratio.
Add Answer to:
Which of the following is not correct regarding the constant
growth dividend discount model?
Group of...
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.
The dividend discount model uses the dividend growth rate to discount the cash flows. Group of...
The dividend discount model uses the dividend growth rate to discount the cash flows. Group of answer choices True or False
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.
Which of the following is not true? Group of answer choices The dividend growth model seeks...
Which of the following is not true? Group of answer choices The dividend growth model seeks to estimate the current market value of a stock by calculating the total future value of the future dividend payments. The dividend growth model cannot be used to estimate the current market value of stocks of firms that don’t issue any dividends. There are ways other than the dividend growth model to conduct stock valuation, including multiplying a benchmark Price-to-Earnings ratio with earnings per...
questions 13-16 please the required 13. An underpriced stock provides an expected return that is return...
questions 13-16 please
the required 13. An underpriced stock provides an expected return that is return based on the capital asset pricing model (CAPM). A. Less than B. Equal to C. Greater than D. Greater than or equal to E. None of the above 14. The constant-growth dividend discount model (DDM) can be used only when the A. Growth rate is less than or equal to the required return B. Growth rate is greater than or equal to the required...
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 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
16. b. All of the following are interchangeable terms used in a Dividend Discount Model except...
16. b. All of the following are interchangeable terms used in a Dividend Discount Model except for: discount rate coupon rate required rate of return cost of equity capital 17. The dividend valuation model that is most appropriate for a young company that pays small dividends now but is expected to increase dividends in a few years is the: zero-growth model. constant growth model. expansion growth model. multiple growth model. b. c. d. 18. What is the estimated value of...
An analyst uses the constant growth model to evaluate a company with the following data for...
An analyst uses the constant growth model to evaluate a company with the following data for a company: Leverage ratio (asset/equity): 1.8 Total asset turnover: 1.5 Current ratio: 1.8 Net profit margin: 8% Dividend payout ratio: 40% Earnings per share in the past year: $0.85 The required rate on equity: 15% Based on an analysis, the growth rate of the company will drop by 25 percent per year in the next two years and then keep it afterward. Assume that...
Chapter 7 - Master it! In practice, the use of the dividend discount model is refined...
Chapter 7 - Master it! In practice, the use of the dividend discount model is refined from the method we presented in the textbook. Many analysts will estimate the dividend for the next 5 years and then estimate a perpetual growth rate at some point in the future, typically 10 years. Rather than have the dividend growth fall dramatically from the fast growth period to the perpetual growth period, linear interpolation is applied. That is, the dividend growth is projected...
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.
questions 13-16 please
the required 13. An underpriced stock provides an expected return that is return based on the capital asset pricing model (CAPM). A. Less than B. Equal to C. Greater than D. Greater than or equal to E. None of the above 14. The constant-growth dividend discount model (DDM) can be used only when the A. Growth rate is less than or equal to the required return B. Growth rate is greater than or equal to the required...
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...
16. b. All of the following are interchangeable terms used in a Dividend Discount Model except for: discount rate coupon rate required rate of return cost of equity capital 17. The dividend valuation model that is most appropriate for a young company that pays small dividends now but is expected to increase dividends in a few years is the: zero-growth model. constant growth model. expansion growth model. multiple growth model. b. c. d. 18. What is the estimated value of...
Chapter 7 - Master it! In practice, the use of the dividend discount model is refined from the method we presented in the textbook. Many analysts will estimate the dividend for the next 5 years and then estimate a perpetual growth rate at some point in the future, typically 10 years. Rather than have the dividend growth fall dramatically from the fast growth period to the perpetual growth period, linear interpolation is applied. That is, the dividend growth is projected...
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