As a Means of Determining a Firm's Cost of Equity

question 200

True/False

As a means of determining a firm's cost of equity financing for an investment, a weakness in the dividend growth model is that the model is highly dependent upon the accuracy of the beta assigned to the firm.

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Definitions:

401(k) Plan

A type of retirement savings plan sponsored by an employer that allows employees to save and invest a portion of their paycheck before taxes are taken out.

PBGC

The Pension Benefit Guaranty Corporation (PBGC) is a U.S. government agency that protects the retirement incomes of American workers in private-sector defined benefit pension plans.

ERISA Fiduciary Advisor

A financial advisor who is required by the Employee Retirement Income Security Act to act in the best interest of participants in retirement plans.

Long-Term Disability Insurance

Insurance that pays a percentage of a disabled employee's salary after an initial period and potentially for the rest of the employee's life.