Which of the Following Statements Is FALSE

question 19

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.

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Definitions:

Sold Out

A situation where all available units of a product or tickets for an event have been purchased, and none are available for sale.

Supply Curves

Graphical representations that show the relationship between the price of a good and the quantity of the good supplied.

Perfectly Elastic

Describes a situation in which the quantity demanded or supplied responds infinitely at a particular price level but is zero at any other price level.

Long Run

A period in economics where all factors of production and costs are variable, allowing for full adjustment to changes.