Based on the Dividend Discount Model, an Increase in Which

question 71

Multiple Choice

Based on the dividend discount model, an increase in which of the following will lower the current value of a stock?
I. amount of the next dividend
II. dividend growth rate
III. discount rate

• A)I only
• B)III only
• C)I and II only
• D)II and III only
• E)I, II, and III

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Definitions:

Proportional Tax

A taxation framework where the same rate is consistently applied to everyone, with no variation based on the amount of income.

Marginal Tax Rate

The rate at which tax is charged on an additional dollar of income.

Average Tax Rate

The ratio of the total taxes paid to the total taxable income, showing the portion of income that goes to taxes.

Income

Financial gains, usually received at consistent intervals, from employment or investing.