Which of the Following Statements Is False

question 85

Multiple Choice

Which of the following statements is false?

• A) As firms mature, their earnings exceed their investment needs and they begin to pay dividends.
• B) Total return equals earnings multiplied by the dividend payout rate.
• C) Cutting the firm's dividend to increase investment will raise the stock price if, and only if, the new investments have a positive NPV.
• D) We cannot use the constant dividend growth model to value the stock of a firm with rapid or changing growth.