The Dividend Growth Model Can Be Used to Compute the Cost

question 12

Multiple Choice

The dividend growth model can be used to compute the cost of equity for a firm in which of the following situations?
I.Firms that have a 100 percent retention ratio
II.Firms that pay an unchanging dividend
III.Firms that pay a constantly increasing dividend
IV.Firms that pay an erratically growing dividend

• A) I and II only
• B) I and IV only
• C) II and III only
• D) I, II, and III only
• E) I, III, and IV only
• F) None of the above.

---

Definitions:

Union Avoidance

involves strategies and practices employed by employers to prevent their workforce from unionizing, focusing on maintaining direct communication with employees.

Featherbedding

Describes a labor practice where employers are compelled to pay for unneeded workers or to compensate for work not actually performed, often due to union agreements.

Chilling Effect

A situation where the threat of legal action or regulation discourages individuals or organizations from exercising their rights or engaging in legitimate practices.

Governance Participation

Involvement of stakeholders in the decision-making processes of an organization or government.