Question

Which of the following is not a problem with the dividend-growth model:

Select one or more:

a. the discount rate is hard to calculate accurately

b. there are no problems, it is 100% accurate

c. dividend growth rates are hard to predict

d. only works with firms that are paying dividends

e. the market growth rate is a “constant” that doesn’t change

Answer #1

while using the dividend growth model we are not using the market growth rate and we are only using the growth rate of the dividend of the firm so we should not be Accounting in market growth rate because it is not a factor which is to be Undertaken for dividend discounting model.

All the other factors such a discounting rate and dividend growth rate and applicability to only dividend paying stocks are are problems associated with dividend discounting model.

Correct answer will be option (e)

Which of the following statements is most correct? Select
one:
a. The constant growth model is often appropriate for companies
that the dividend growth rate is larger than its required rate of
return on stock.
b. The constant growth model is often appropriate for companies
that never pay dividend.
c. Two firms with the same dividend and growth rate should have
the same stock price.
d. The constant growth model can be applied to companies that
expect zero dividend growth...

Which of the following statements is most correct?
Select one:
a. The constant growth model is often appropriate for companies
that never pay dividend.
b. The constant growth model is often appropriate for mature
companies with a stable history of growth.
c. Two firms with the same dividend and growth rate must also
have the same stock price.
d. The constant growth model cannot be applied to companies that
expect zero dividend growth rate.
e. The constant growth model is...

16. Which of the following statements is CORRECT? (2pts)
a. The constant growth model takes into consideration the
capital gains investors expect to earn on a stock
b. It is appropriate to use the constant growth model to
estimate a stock's value even if its growth rate is never expected
to become constant.
c. If a stock has a required rate of return ke = 12%, and if its
dividend is expected to grow at a constant rate of 5%,...

Based on the dividend discount model, a decrease in which of the
following will lower the current intrinsic value of a stock (all
else held constant)?
I. amount of the next
dividend (D1)
II. dividend growth rate
(g)
III. risk-adjusted
discount rate (rs)
Select one:
a. I only
b. III only
c. I and II only
d. II and III only
e.
I, II, and III

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...

The mixed growth dividend discount model of share valuation
allows for the fact that
Select one:
a. companies typically go through life cycles.
b. all these answers are correct.
c. some companies do not pay any dividends.
d. some companies will fail and go into liquidation.

Which of the following statements is incorrect regarding the
constant growth model?
a.Another name for the dividend to be received in one year
divided by the current stock price is the expected dividend
yield.
b.The constant growth model assumes that earnings, dividends and
stock prices are expected to grow at a constant rate.
c.If the dividend growth rate is zero, the constant growth model
becomes a zero-growth valuation model.
d.The constant growth model can still be used if the required...

1- The constant perpetual growth model assumes the:
A- dividends are paid for a stated number of years only.
B- net income is all paid out in dividends.
C- growth rate is less than the discount rate.
D- dividends are constant in amount.
E- discount rate increases at a constant rate.

Which of the following statements is incorrect regarding the
constant growth model?
Group of answer choices
If the dividend growth rate is zero, the constant growth model
becomes a zero-growth valuation model.
The constant growth model can still be used if the required rate
of return is less than the dividend growth rate.
Another name for the dividend to be received in one year divided
by the current stock price is the expected dividend yield.
The constant growth model calculates...

Answer the following questions regarding dividend discount
models:
What are the two components of most stocks’ expected total
return?
What is the general formula to calculate the capital gains yield
and the dividend yield of a stock
(one that holds when firm’s dividends are growing at a constant
rate and when they are not)?
Write out and explain the dividend discount model formula for a
constant growth stock. What is
the capital gains yield and dividend yields for a constant...

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