Answer This Question Based on the Dividend Growth Model

question 74

Multiple Choice

Answer this question based on the dividend growth model. If you expect the market rate of return to increase across the board on all equity securities, then you should also expect:

• A) an increase in all stock values.
• B) all stock values to remain constant.
• C) a decrease in all stock values.
• D) dividend-paying stocks to maintain a constant price while non-dividend paying stocks decrease in value.
• E) dividend-paying stocks to increase in price while non-dividend paying stocks remain constant in value.

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Definitions:

Level Of Use

Level of use refers to the degree or extent to which a resource, service, or facility is utilized.

Salvage Value

The estimated residual value of an asset at the end of its useful life.

Double Declining-Balance Depreciation

An accelerated depreciation method that doubles the rate of straight line depreciation.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or loss of value.