Which of the Following Is TRUE About the Implicit Assumption

question 43

Multiple Choice

Which of the following is TRUE about the implicit assumption of the Dividend Discount Model (DDM) that "investors are rational"?
I.It assumes that at each period of time, investors react rationally and value the shares based on what they rationally expect to receive next year.
II.It rules out "speculative bubbles" or what is colloquially known as the "bigger fool theorem."

• A)I is correct, II is incorrect.
• B)I is incorrect, II is correct.
• C)I and II are correct.
• D)I and II are incorrect.

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Definitions:

Self-Regulation

The ability to understand and manage your behavior and reactions to feelings and things happening around you.

Self-Efficacy

The belief in one's ability to succeed in specific situations or accomplish a task, which can influence how people approach goals, tasks, and challenges.

Achievement Motivation

The need, or desire, to attain a certain standard of excellence.

Achievement Motivation

The drive that propels individuals to strive for success, mastery, and to overcome obstacles.