Which of the Following Statements Is CORRECT

question 45

Multiple Choice

Which of the following statements is CORRECT?

• A) The constant growth model takes into consideration the capital gains investors expect to earn on a stock.
• B) Two firms with the same expected dividend and growth rate must also have the same stock price.
• C) It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant.
• D) If a stock has a required rate of return r_s = 12%,and if its dividend is expected to grow at a constant rate of 5%,then the stock's dividend yield is also 5%.
• E) The price of a stock is the present value of all expected future dividends,discounted at the dividend growth rate.

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Definitions:

Journal Entries

An accounting action recorded through the logging of debits and credits across accounts, forming the basis for building financial statements and tracking financial transactions.

Debits And Credits

The two sides of accounts in double-entry bookkeeping; debits represent increases in assets or expenses and decreases in liabilities or equity, while credits do the inverse.

Slide

An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 as $54.20 or $5,420.00.

Accounting Equation

A fundamental principle of accounting expressing the relationship between assets, liabilities, and equity.