Whenever the Constant-Growth Rate for Dividends Exceeds the Required Rate

question 86

True/False

Whenever the constant-growth rate for dividends exceeds the required rate of return on the common stock, the constant-growth model provides invalid solutions.

---

Definitions:

Actual Authority

The express and implied powers granted by a principal to an agent to enter into contracts or make decisions on behalf of the principal.

Apparent Authority

A doctrine in law where a principal leads a third party to believe that an agent has the authority to act on the principal's behalf, even if the agent doesn't have actual authority.

Agency Contract

A legal agreement wherein one party (the agent) agrees to act on behalf of another party (the principal) in a business transaction or other matter.

Third Party

An individual or group not directly involved in a contract or legal transaction but could be affected by its outcome.