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Author Question: Which of the following statements is correct? (Read 40 times)

byomi

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Question 1

Which of the following is the basis for stock values?

expected dividends


required rate of return


expected sale price 


the firm’s liquidation value



Question 2

Which of the following statements is correct?

The price of a stock is the present value of all expected future dividends, discounted at the sum of the required rate of return and the dividend growth rate.


The stock valuation model, P0 = D1/(rs– g), cannot be used for firms that have expected negative, but constant, growth rates.


A necessary condition for the validity of the constant dividend growth model is that rs should be greater than g. 


The constant growth model cannot be used for a zero growth stock, where the dividend is expected to remain constant over time.



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Marked as best answer by byomi on Aug 7, 2023

KobyRhoads

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byomi

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Reply 2 on: Aug 7, 2023
Gracias!


nothere

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Reply 3 on: Yesterday
Great answer, keep it coming :)

 

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