If the Model Below Is to Give a "Reasonable" Valuation

question 122

Multiple Choice

If the model below is to give a "reasonable" valuation of a stock,which of the following is not a valid assumption for the model?

• A) Growth,g,is negative.
• B) There will be no growth,i.e. ,g is zero.
• C) The growth rate exceeds the required rate of return.
• D) The required return is exceptionally high (r_s > 30%).
• E) All of the above are workable assumptions and are valid in the sense that the model can be used even if they hold true.

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Definitions:

Age-Group Comparison Norms

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