Use the Following Two Statements to Answer This Question

question 12

Multiple Choice

Use the following two statements to answer this question:

• A) I is incorrect, II is correct.
• B) I is correct, II is incorrect.
• C) I and II are incorrect.
• D) I and II are correct.
• I.The DDM assumes that common shares are valued according to the present value of their expected future dividends.
• II.The DDM argues that the selling price at any point (say,time n)will equal the present value of all the expected future dividends from period n to infinity.

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Definitions:

Alternative Hypothesis

A statement in hypothesis testing that suggests a significant difference or relationship exists between variables, contrasting the null hypothesis.

Type I Error

The incorrect rejection of a true null hypothesis, also known as a "false positive."

P-value

A measure in statistical hypothesis testing representing the probability of observing a statistic at least as extreme as the one observed, under the assumption that the null hypothesis is true.

Null Hypothesis

A hypothesis that suggests there is no statistical significance between the specified sets of observations.