The Basic Assumption of the Gordon Growth Model Is That

question 23

Multiple Choice

The basic assumption of the Gordon growth model is that:

• A) Dividends will grow at a faster rate than the required return.
• B) No earnings will be retained by the firm to finance growth prospects.
• C) Bonds are perfect substitutes for common stock.
• D) Dividend payments will grow at a constant rate.
• E) The firm will never pay dividends.

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Definitions:

Enthymeme

A rhetorical argument that contains an implied premise or conclusion which is not expressly stated.

Missing Premise

An unstated assumption or belief that is required for an argument's conclusion to be logically valid but is not explicitly provided.

Traditional View

The conventional or long-established perspective or belief in a particular context.

Existential Import

The quality of a proposition or statement that implies the existence of something.