Precautionary Saving Is Saving

question 118

Multiple Choice

Precautionary saving is saving:

• A)to meet long-term objectives, such as retirement, college attendance, or the purchase of a home.
• B)for protection against unexpected setbacks, such as the loss of a job or a medical emergency.
• C)for the purpose of leaving an inheritance.
• D)done in anticipation of sales or bargain in the future.

Understand the impact of dividend policy on dividend growth rate and firm valuation.

Comprehend the Gordon growth model and its conditions for application.

Describe the dividend reinvestment and its impact on company growth and stock value.

Analyze the relationship between stock values using constant and variable dividend growth rates.