Which of the Following Statements Is Correct

question 75

Multiple Choice

Which of the following statements is correct?

• A) The constant growth DCF model can be used to value a stock only if the stock's dividends are expected to grow forever at a constant rate which is less than the required rate of return on the stock.
• B) If the growth rate is negative,the constant growth DCF model cannot be used.
• C) The constant growth DCF model may be written as r₀ = D₀/P₀ + g.
• D) The constant growth DCF model may be written as P₀ = D₀/(r + g).
• E) The constant growth DCF model may be written as P₀ = D₀/(r − g).

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Definitions:

Disaffirm

The act of denying, rejecting, or voiding a legal contract or agreement, especially by someone who is not legally competent.

Necessaries

Essential items required for living, such as food, shelter, and clothing, which a person cannot legally be deprived of.

Necessary

In legal and ethical contexts, necessary refers to something that is required or indispensable to achieve a specific outcome or obligation.

Disaffirm

The legal act of renouncing or rejecting a contract or agreement, especially by a party who was not legally competent to enter it at the time of agreement.