The Constant Dividend Growth Model Is

question 34

Multiple Choice

The constant dividend growth model is:

• A) generally used in practice because most stocks have a constant growth rate.
• B) generally used in practice because the historical growth rate of most stocks is constant.
• C) generally not used in practice because most stocks grow at a non constant rate.
• D) generally not used in practice because the constant growth rate is usually higher than the required rate of return.
• E) based on the assumption Dow 30 represents a good estimate of the market index.

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Definitions:

Spain

A country in southwestern Europe on the Iberian Peninsula, known for its rich history, cultural diversity, and significant contributions to art, literature, and science.

Headright System

A land grant policy that allocated parcels of land to settlers and investors who financed the passage of indentured servants to the Americas, prevalent in the 17th century.