In Contrast to the FCFE Approach, the Dividend Discount Model

question 9

Multiple Choice

In contrast to the FCFE approach, the dividend discount model (DDM) approach values:

• A) cash flows that are available for distribution to stockholders.
• B) the stream of cash flows that stockholders expect to receive through dividend payments.
• C) the stream of cash flows that stockholders expect to receive through bonus issue.
• D) the stream of cash flows that stockholders expect to receive through stock repurchase.

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Definitions:

Supremacy Clause

The Supremacy Clause is a provision in Article VI of the U.S. Constitution establishing that federal law takes precedence over state laws and constitutions when they are in conflict.

Constitution

The fundamental law of a nation or state, outlining the principles and organization of its government. In the U.S. context, it refers to the supreme law of the United States.

Private Property

The legal designation for ownership of property by non-governmental legal entities, individuals, or corporations.

First Amendment

Part of the United States Constitution that guarantees freedoms concerning religion, expression, assembly, and the right to petition the government.