Underlying assumption of the dividend growth model

Assignment Help Financial Management
Reference no: EM131304039

Which one of the following is an underlying assumption of the dividend growth model?

A stock has the same value to every investor.

A stock's value is equal to the discounted present value of the future cash flows which it generates.

A stock's value changes in direct relation to the required return.

Stocks that pay the same annual dividend have equal market values.

The dividend growth rate is inversely related to a stock's market price.

Reference no: EM131304039

Questions Cloud

Explain the purpose of a swot analysis : Discuss the advantages and disadvantages of the SWOT analysis. Explain the purpose of a SWOT analysis. Are there other alternative to using a SWOT (define at least ONE).
Identify a familiar product that recently was modified : Identify a familiar product that recently was modified, categorize the modification, and describe how you would have modified it differently.
What do you understand by normalization : What do you understand by normalization and Find all cities of residence of all employees who work directly for STC
Formulate code of ethics for an organization that you aspire : Formulate a code of ethics for an organization that you aspire to work for one day. You code of ethics should outline ethical behavior that is acceptable and unacceptable.
Underlying assumption of the dividend growth model : Which one of the following is an underlying assumption of the dividend growth model?
What message do the symbols convey to potential customers : Identify three service organizations you see in outdoor, television, or magazine advertising. What symbols are used to represent their services? What message do the symbols convey to potential customers?
What has been the impact of the 1986 immigration bill : What has been the impact of the 1986 Immigration Bill on the US economy? What has been its impact on the Chicano/ Latino community? What are some of the most prevalent racial stereotypes of black people? How are these stereotypes ..
Does gold have intrinsic value : In what sense does a bubble in the price of an asset result from a "set of self-confirming beliefs"?
Create a mission statement for the new division : Create a mission statement for the new division. Create a vision statement that clearly demonstrates what you want your business to become in the future.

Reviews

Write a Review

Financial Management Questions & Answers

  Financed by risk-free debt-expected market risk premium

A company is 37% financed by risk-free debt. The interest rate is 12%, the expected market risk premium is 10%, and the beta of the company’s common stock is 0.62. What is the company cost of capital? What is the after-tax WACC, assuming that the com..

  Saving for your retirement by depositing

Suppose you begin saving for your retirement by depositing $2000 per year in an IRA. If the interest rate is 12.3%, how much will you have in 35 years if each deposit occurs at the end of the year? How much if you make yearly deposits beginning today..

  The firms financial position at a point in time

The statement of cash needs tells us how much cash the firm will require during some future period, generally a month or a year. The balance sheet gives us a picture of the firm's financial position at a point in time. The statement of cash flows tel..

  Futures contracts are two types of derivative investments

Options and futures contracts are two types of derivative investments. Which of the two would you rather invest in and why? Make sure to discuss the major differences between the two as part of your answer.

  National association of purchasing managers convention

You're the director of purchasing at a telecommunications company in Seattle and you've just gone to meet your sister-in-law for coffee at a little café off Rush Street. Earlier this week you arrived in Chicago to attend the National Association of P..

  Bonds two years ago at coupon rate

Heginbotham Corp. issued 20-year bonds two years ago at a coupon rate of 8.6 percent. The bonds make semiannual payments. If these bonds currently sell for 107 percent pf par value, what is the YTM?

  How much will she take home under each method

Jill Meier is the sole owner of Meier Corp., which provides her only source of income. Jill has always paid herself entirely by drawing dividends fom her corporation. A friend suggested that as long as she is earning about what she would have to pay ..

  What is the accumulated sum of stream of payments

What is the accumulated sum of the following stream of payments 2849 every year at the end of the year for 11 years at 9.04 percent compounded annually?

  If firm receives a cash flow from an investment

If firm receives a cash flow from an investment that will increase by 10 percent annually for an infinite number of years. This cash flow stream is called. A portfolio with a level of systematic risk the same as that of the market has a beta that is...

  What is the discounted payback period if the discount rate

An investment project costs $10,000 and has annual cash flows of $2,950 for six years. What is the discounted payback period if the discount rate is zero percent? Discounted payback period years What is the discounted payback period if the discount r..

  What is present value of your windfall if appropriate rate

You have just received notification that you have won the $2.18 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 62 years from now. What is the present value..

  What is net present value of installing the donut makers

The owners of a chain of fast-food restaurants spend $25000000 installing donut makers in all their restaurants. This is expected to increase cash flows by $11000000 per year for the next 5 years. The discount rate is 5.3%. What is the net present va..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd