The Required Rate of Return Necessary for the Dividend Valuation

question 56

Multiple Choice

The required rate of return necessary for the dividend valuation model can be estimated using

• A)the Capital Asset Pricing Model.
• B)comparisons to the rates of return on stocks of similar risk.
• C)a subjective assessment of the return required over and above less risky investments such as government bonds.
• D)any or all of the above.

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Definitions:

Federal Reserve System

The central banking system of the United States, responsible for monetary policy, bank regulation, and the stability of the financial system.

GDP

Gross Domestic Product, the total market value of all goods and services produced within a country in a specific time period, used as a broad measure of overall economic performance.

Personal Disposable Income

The amount of money that individuals have available for spending and saving after income taxes have been accounted for.

Manufacturing Output

The total value or volume of goods and products produced within a manufacturing sector in a specific period.