Which two of the following five statements are correct? Select two alternatives: Because the cash flows...
Which two of the following five statements are correct?
Select two alternatives:
- Because the cash flows from stocks are known with certainty, we can discount them using the risk-free interest rate.
- We should use the general dividend discount model to value the stock of a firm with rapid or changing growth.
- Successful young firms often have high initial earnings growth rates.
- During periods of high growth, it is not unusual for firms to pay out 100% of their earnings to shareholders in the form of dividends.
- A firm can pay out its earnings to investors or reinvest its earnings.
Homework Answers
Successful young firms often have high initial earnings growth rates.
Explanation: - the reason for the same is the innovative nature of business
A firm can pay out its earnings to investors or reinvest its earnings.
Explanation :-
The firm has two options with either it can distribute the retained earnings or it can reinvest the same
Add Answer to:
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