When Using the Dividend Discount Model, Assuming That Growth (G)

question 28

Multiple Choice

When using the dividend discount model, assuming that growth (g) will remain constant, under which of the following circumstances will the dividend yield be equal to the required return on a common stock (rs) ?

• A)g = 0
• B)g > 0
• C)g < 0
• D)g = rs
• E)g > rs

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Definitions:

Fractions

Mathematical expressions representing the division of one quantity by another, indicating a part of a whole.

Equal

Having the same value, measure, or quantity as something else.

Precordial Electrode

Electrodes placed on the chest during an electrocardiogram (ECG) to record electrical activity of the heart.