The Constant Growth Dividend Valuation Model Does Not Hold When

question 11

Multiple Choice

The constant growth dividend valuation model does not hold when

• A)ke is greater than g
• B)dividends are growing faster than 4 percent
• C)g is greater than ke
• D)the current dividend is known

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually derived from profits.

Accounts Receivable

Amounts due from customers for merchandise or services rendered by a corporation, still awaiting payment.

Utilities Expense

Costs incurred by a business for basic utilities such as water, electricity, gas, and sewage services.

Services Provided

Services provided refer to the performance of non-tangible tasks or activities by a company for its clients or customers, as opposed to selling physical products.