The Formula P₀ = DIV/r Represents

question 55

Multiple Choice

The formula P₀ = DIV/r represents

• A)the present value of a stream of zero growth dividends in perpetuity.
• B)the value of a no growth dividend stream.
• C)a lower value than if a positive growth element was included.
• D)All of the above.
• E)None of the above.

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Definitions:

Annual Return

The percentage of gain or loss on an investment over a one-year period, taking into account both capital gains and dividends.

Retirement Fund

Financial resources that have been saved and are used to support a person's retirement.

Mutual Fund

An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments.

Compounded Monthly

The method of determining interest that includes both the original principal sum and the interest that has previously been added up over past months.