The Dividend Growth Model

question 97

Multiple Choice

The dividend growth model:

• A) Values a stock based solely on the rate of dividend growth.
• B) Can be used to value all common stocks.
• C) Considers both the dividend yield and the capital gains yield.
• D) Cannot be used to value zero growth dividend stocks.
• E) Is independent of an investor's required rate of return.

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Definitions:

Contractual Liability

Contractual liability involves obligations that a party has agreed to assume in a contract, making them legally responsible for fulfilling the terms of the agreement.

Transfer Warranty

A guarantee in legal documents, especially in sales of goods, assuring the recipient that the transferor has valid title and that the transfer is rightful.

Presentment Warranty

Assurance given in a transaction that certain facts are true as of the time of the deal, generally related to financial instruments.

Draft

A preliminary version of a document, plan, or design that is open for discussion, revision, or improvement.