The Underlying Assumption of the Dividend Growth Model Is That

question 372

Multiple Choice

The underlying assumption of the dividend growth model is that a stock is worth:

• A) The same amount to every investor regardless of their desired rate of return.
• B) The present value of the future income which the stock generates.
• C) An amount computed as the next annual dividend divided by the market rate of return.
• D) The same amount as any other stock that pays the same current dividend and has the same required rate of return.
• E) An amount computed as the next annual dividend divided by the required rate of return.

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Definitions:

Misdemeanor

A criminal offense considered less severe than a felony, often punishable by fines or short term imprisonment.

RICO

RICO, the Racketeer Influenced and Corrupt Organizations Act, is a federal law aimed at combating organized crime by allowing prosecution and civil penalties for racketeering activity.

Criminal Penalties

Punishments imposed by the court system for committing acts that violate criminal law, including fines, imprisonment, or probation.

Civil Penalties

Civil penalties are fines or other forms of punishment imposed by a governmental agency for violations of regulatory laws or ordinances, not involving criminal prosecution.