Which of the Following Statements Is False

question 55

Multiple Choice

Which of the following statements is false?

• A) We cannot use the general dividend discount model to value the stock of a firm with rapid or changing growth.
• B) As firms mature, their growth slows to rates more typical of established companies.
• C) The dividend discount model values the stock based on a forecast of the future dividends paid to shareholders.
• D) The simplest forecast for the firm's future dividends states that they will grow at a constant rate, g, forever.

---

Definitions:

Consolidation Adjustments

Adjustments made to eliminate transactions between entities within a consolidated group, ensuring that the consolidated financial statements present a group as a single economic entity.

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as a single entity.

Double Counting

The error of including the same item or financial transaction more than once in a calculation or analysis, leading to inaccurate results.

Fair Value Option

An accounting strategy allowing companies to choose to value and report certain assets and liabilities at fair market prices.