The Constant Dividend Growth Model Is

question 34

Multiple Choice

The constant dividend growth model is:

• A) generally used in practice because most stocks have a constant growth rate.
• B) generally used in practice because the historical growth rate of most stocks is constant.
• C) generally not used in practice because most stocks grow at a non constant rate.
• D) generally not used in practice because the constant growth rate is usually higher than the required rate of return.
• E) based on the assumption Dow 30 represents a good estimate of the market index.

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Definitions:

Supplies Expense

An accounting term referring to the cost of supplies consumed or used by a business within a reporting period.

Worksheet

An accounting tool used for planning and preparing financial statements, typically including trial balance, adjusting entries, adjusted trial balance, and financial statements.

Depreciation Expense

The systematic allocation of the depreciable amount of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Salaries and Wages Expense

Salaries and wages expense refers to the total amount paid by a business for employee services during a specific period, including salaries, hourly wages, and bonuses.