Which of the Following Will Preclude the Use of the Gordon

question 76

Multiple Choice

Which of the following will preclude the use of the Gordon Model for calculating the intrinsic value of a stock?

• A)The constant growth percentage is greater than the market return.
• B)D ₀ is unknown.
• C)The constant growth percentage and the market return are very close numerically.
• D)Both a. and c. above will preclude use of the Gordon model.
• E)All of the above will preclude use of the Gordon model.

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Definitions:

Post-Closing Trial Balance

A list of all accounts and their balances after closing entries are made, showing that debits equal credits.

Adjusting Entries

Entries recorded in financial journals at the conclusion of an accounting period for the purpose of assigning earnings and expenditures to their rightful period.

Work Sheet

A document or tool used in accounting to gather information and perform calculations for preparing financial statements and other reports.

Retained Earnings

The portion of a company's profits not distributed as dividends but retained for reinvestment in the business or to pay off debt.