According to the Price/earnings Approach to Share Valuation, If the Dividend

question 63

Multiple Choice

According to the price/earnings approach to share valuation, if the dividend growth rate is expected to drop or if the required return goes up, the net effect is a

• A) higher P/E ratio.
• B) higher share price.
• C) lower P/E ratio.
• D) higher retention rate.

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Definitions:

Defense Mechanism

Psychological strategies used by individuals unconsciously to protect themselves from anxiety or unacceptable thoughts and feelings.

Homophobia

The fear, hatred, or prejudice against homosexual people or homosexuality in general, often leading to discrimination.

Oedipus Complex

According to Freud, a boy’s intense desire to replace his father and enjoy the affections of his mother.

Affections

The feelings of fondness or liking directed toward someone or something.