Which One of the Following Sets of Dividend Payments Best

question 41

Multiple Choice

Which one of the following sets of dividend payments best meets the definition of two-stage growth as it applies to the two-stage dividend growth model?

• A)no dividends for 5 years, then increasing dividends forever
• B)$1 per share annual dividend for 2 years, then $1.25 annual dividends forever
• C)decreasing dividends for 6 years followed by one final liquidating dividend payment
• D)dividends payments which increase by 2, 3, and 4 percent respectively for 3 years followed by a constant dividend thereafter
• E)dividend payments which increase by 10 percent per year for 5 years followed by dividends which increase by 3 percent annually thereafter

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Definitions:

Sample Proportion

The proportion or percentage of the sample that embodies a specific characteristic or feature.

Population Proportion

The ratio or percentage of a particular group within a larger population that shares a characteristic.

Continuity Correction Factor

An adjustment made to a discrete probability distribution when approximating it by a continuous distribution.

Standard Error

The standard deviation of the sampling distribution of a statistic, most commonly of the mean.