Using the Constant Growth Dividend Valuation Model and Assuming Dividends

question 93

Multiple Choice

Using the constant growth dividend valuation model and assuming dividends will growth a constant rate forever,the increase in the value of the stock each year should be equal to the

• A) growth rate in dividends, g.
• B) required return on the stock, rcs.
• C) dividend yield plus the capital gains yield.
• D) dividend yield.

---

Definitions:

Market Wage

The prevailing rate of pay for specific jobs in the labor market, determined by supply and demand for labor in that field.

Pairwise Voting

An electoral system method where candidates are matched in pairs and the winner of each pair is determined by a vote to choose the most preferred option.

Government Intervention

The involvement or actions by a government in a market, often intended to correct inefficiencies and failures.

Asymmetric Information

Asymmetric information exists when one party in a transaction has more or superior information compared to another, leading to an imbalance in power and potentially unfair outcomes.