If the Model Below Is to Give a "Reasonable" Valuation

question 86

Multiple Choice

If the model below is to give a "reasonable" valuation of a stock,which of the following is NOT a valid assumption of the model?
Po = [Do(1 + g) ] / (Ke - g)

• A) Growth, g, is negative.
• B) There will be no growth.
• C) The growth rate exceeds the required rate of return.
• D) The required return is exceptionally high (Ks > 30%).

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Definitions:

Heterozygous

A genetic condition where an individual has two different alleles of a gene.

Dominant–Recessive Pattern

The interaction of a heterozygous pair of alleles in such a way that the phenotype reflects one allele (the dominant gene) more than the other (the recessive gene).

Additive Pattern

A situation or process where the effects of separate factors combine in a straightforward, cumulative manner.

Multifactorial Pattern

A pattern determined by many factors or causes that are often interrelated, especially used in the context of genetics or behavior analysis.