Why Are the Values of Past Dividends Not Included in the Dividend

question 28

Multiple Choice

Why are the values of past dividends not included in the dividend valuation method for the price of a share?

• A) Because the dividends have already been spent by the shareholders.
• B) Because the dividends may be recalled if they are cut in the future.
• C) Because these dividends are already baked into the current price of the shares.
• D) Because the dividends have often been paid in non-cash forms like stocks dividends.
• E) Because the dividends are under control of the current Board of Directors, not previous Boards.

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Definitions:

Operating Departments

Departments within an organization directly involved in its primary revenue-generating activities.

Expense Allocation

The process of assigning indirect costs to different departments, products, or other segments of a business.

Market Values

Market Values refer to the current price or value of assets, goods, or services determined through supply and demand forces in the marketplace.

Raw Material

The fundamental materials that are processed or transformed into finished goods or products in manufacturing.