If the Expected ROE on Reinvested Earnings Is Equal to K

question 104

Multiple Choice

If the expected ROE on reinvested earnings is equal to k, the multistage DDM reduces to

• A) V₀ = (Expected dividend yield in year 1)/k.
• B) V₀ = (Expected EPS in year 1)/k.
• C) V₀ = (Treasury bond yield in year 1)/k..
• D) V₀ = (Market return in year 1)/k.

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