The Underlying Assumption of the Dividend Growth Model Is That

question 52

Multiple Choice

The underlying assumption of the dividend growth model is that a stock is worth

• A)the present value of the future income provided by that stock.
• B)the same amount to every investor.
• C)an amount computed as the next annual dividend divided by the market rate of return.
• D)an amount computed as the last annual dividend divided by the required rate of return.
• E)the same amount as any other stock that paid the same dividend this year.

---

Definitions:

Causality

This refers to the relationship between cause and effect where one event (the cause) directly results in another event (the effect).

Morality

Refers to principles concerning the distinction between right and wrong or good and bad behavior.

Assimilating Information

The process of absorbing and integrating new information into one's existing knowledge or understanding.

Adaptation

In Piaget’s theory of cognitive development, the process by which the human mind constructs its knowledge, both assimilating new information to existing knowledge structures or understandings, and accommodating those structures to create a better fit to what is new.