Which of the Statements Below Is FALSE

question 36

Multiple Choice

Which of the statements below is FALSE?

• A)The dividend model requires that a firm have a cash dividend history and that the dividend history shows a constant dividend or a positive growth in dividends.
• B)A problem with using the dividend growth model is that it appears to underestimate the expected return for some stocks.
• C)A problem with using the dividend growth model is that it produces a negative expected return whenever a firm cuts its dividends.
• D)A problem with using the dividend growth model is that it appears to underestimate the expected return for all stocks.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations using its current assets.