How Does the Condensation Hypothesis Describe the Moon's Origin

question 93

Multiple Choice

How does the condensation hypothesis describe the Moon's origin?

• A)The Moon broke off from a rapidly spinning Earth.
• B)The Earth and the Moon formed from the same cloud of matter.
• C)The Moon formed elsewhere in the solar nebula and was later captured by the Earth.
• D)The Moon was formed when a very massive planetesimal smashed into the young Earth.

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Definitions:

Bird-In-The-Hand Theory

Assumes that investors value a dollar of dividends more highly than a dollar of expected capital gains because the dividend yield component, D1/P0, is less risky than the g component in the total expected return equation rs = D1/P0 + g.

Dividend Yield

A financial benchmark that illustrates the relation between a company's per annum dividend issuance and its share price.

Required Return

The expectancy of financial gain on an investment, considering its risk profile, set by investors as a benchmark.

Dividend Irrelevance Theory

A theory suggesting that dividend policy has no effect on a company's value or its stock price.