How Is It Possible to Ignore Cash Dividends That Occur

question 103

Multiple Choice

How is it possible to ignore cash dividends that occur far into the future when using a dividend discount model? Those dividends:

• A)Will be paid to a different investor
• B)Will not be paid by the firm
• C)Have an insignificant present value
• D)Ignore the tax consequences of future dividends

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Definitions:

Canada Pension Plan

The Canada Pension Plan is a public retirement plan that provides pension and benefits when Canadians retire, become disabled, or die, funded by employee and employer contributions.

Contributory Plan

A retirement or insurance plan where both the employer and the employee make contributions towards the benefits received.

Health Insurance Plans

Insurance coverage that pays for medical and surgical expenses incurred by the insured, often offered as part of employment benefits.

Provincial and Federal Governments

Different levels of government in a federal system, with provincial governments handling regional matters and the federal government taking charge of national affairs.