Which of the Following Statements Concerning the Dividends-And-Earnings (D&E) Approach

question 81

Multiple Choice

Which of the following statements concerning the dividends-and-earnings (D&E) approach to stock valuation are true?
I. The D&E valuation method works just as well for non-dividend paying stocks as it does for dividend-paying stocks.
II. The current value of a stock using the D&E method is equal to the expected selling price of the stock plus the present value of the future dividends.
III. The D&E approach considers earnings per share and the price/earnings ratio.
IV. The D&E considers a finite investment period.

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

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