The Underlying Assumption of the Dividend Growth Model Is That

question 15

Multiple Choice

The underlying assumption of the dividend growth model is that a stock is worth:

• A) the same amount to every investor regardless of their desired rate of return.
• B) the present value of the future income which the stock generates.
• C) an amount computed as the next annual dividend divided by the market rate of return.
• D) the same amount as any other stock that pays the same current dividend and has the same required rate of return.
• E) an amount computed as the next annual dividend divided by the required rate of return.