If the Required Rate of Return Used in the Dividend

question 380

Multiple Choice

If the required rate of return used in the dividend growth model is increased, then:

• A) The dividend amount must also increase.
• B) The current value of the stock will decrease.
• C) P₀will increase.
• D) The supernormal model must be used to value the stock.
• E) The growth rate must also increase.

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Definitions:

Labor Quantity Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate.

Controllable Overhead Variance

Controllable overhead variance is the difference between the actual overhead costs incurred and the budgeted overhead costs that could be controlled.

Overhead Applied

The portion of overhead costs allocated to specific jobs or production activities based on a predetermined formula or rate.

Overhead Volume Variance

The difference between the budgeted and actual overhead costs due to changes in the level of production or activity.