Which One of the Following Is an Underlying Assumption of the Dividend

question 22

Multiple Choice

Which one of the following is an underlying assumption of the dividend growth model?

• A)A stock has the same value to every investor.
• B)A stock's value is equal to the discounted present value of the future cash flows which it generates.
• C)A stock's value changes in direct relation to the required return.
• D)Stocks that pay the same annual dividend have equal market values.
• E)The dividend growth rate is inversely related to a stock's market price.

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