One Rational for Using Expected Dividends in Valuation Is

question 7

Multiple Choice

One rational for using expected dividends in valuation is

• A) Dividends are a necessary payment in order for a firm to have value.
• B) Dividends are paid in cash, and cash serves as a measurable common denominator for comparing the future benefits of alternative investment opportunities.
• C) Dividends are the most reliable measure of value because most companies payout dividends to shareholders.
• D) Dividend payout ratios are set based on profitability.

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Definitions:

Discouraged Workers

Individuals who are not actively seeking employment due to believing that no jobs are available for them or there are none for which they would qualify.

Unemployment Insurance

A government-provided benefit offering temporary financial assistance to workers who have lost their jobs through no fault of their own.

Deflation

A decrease in the general price level of goods and services in an economy over a period, leading to increased purchasing power of the currency.

Disinflation

A reduction in inflation rate, signifying a deceleration in how quickly the costs for goods and services increase.