Which of the Following Statements Is FALSE of the Dividend-Discount

question 16

Multiple Choice

Which of the following statements is FALSE of the dividend-discount model?

• A) We cannot use the 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, i.e., forever.

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Definitions:

Stimulus Discrimination

The ability of an individual to differentiate between similar stimuli and respond to them differently.

Selective Retention

The psychological process by which individuals remember information that is consistent with their beliefs and attitudes while forgetting or ignoring contradictory information.

Routine Problem Solving

The use of simple, habitual decision-making strategies in buying situations that are familiar and not considered to be of high importance.

Behavioral Learning

Behavioral learning theory suggests that learning is the result of conditioning, where behavior is shaped through reinforcement or punishment, leading to a change in behavior patterns.