Omega Inc Has a History of Abnormally High Growth Due to to General

question 47

Multiple Choice

Omega Inc. has a history of abnormally high growth due to general economic fluctuations. Estimating the cost of common equity using the discounted cash flow approach is difficult because:

• A) the dividend yield is extremely difficult to estimate.
• B) the proper growth rate is difficult to establish.
• C) the market price of the common equity is very volatile.
• D) the firm grows at a constant rate in perpetuity.
• E) the firm's historical data of dividend yield is unavailable.

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Definitions:

Morphological Divergence

Evolutionary pattern in which a body part of an ancestor changes differently in its different descendants.

Lines of Descent

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Eroding Hillsides

Areas where the surface soil has been worn away, often due to water, wind, or human activity, leading to a loss of stability and vegetation.

Shallow Sea

A part of the sea that is not deep, often found near coastlines, where sunlight can reach the seabed, supporting various marine life.