Which of the Following Statements Is NOT True About Constant-Growth

question 38

Multiple Choice

Which of the following statements is NOT true about constant-growth stocks?

• A) Cash dividend remains constant over time.
• B) Mature companies with a history of stable growth show this pattern.
• C) Dividends grow at a constant rate from one period to the next forever.
• D) Far distant-dividends have a very small present value and add little to the stock's price.

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Definitions:

Target Costing

A pricing method where the selling price is set first, and then the target cost for producing the product is determined by subtracting a desired profit margin.

Desired Return

The specific profit that an investor aims to achieve from an investment.

Investment

The allocation of resources, such as time, money, or effort, in something with the expectation of receiving a future return or profit.

Traceable Fixed Expense

Fixed costs that can be directly linked to a specific business center or segment.