According to course materials, dividend growth model is simple to use but suffers from the following drawback(s):OA. It assumes a constant growth rate.OB. It is not easy to forecast the growth rateOC. Both A and BOD. Neither A or B

The dividend growth model (or Gordon growth model) is one of the models used by investors to…

Answered: According to course materials, dividend…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

State if each of the following would increase or decrease AFN. A high growth rate. A low capital intensity ratio. A low spontaneous liabilities-to-sales ratio. A high profit margin. A low payout ratio.
An increase in a firm's expected growth rate would cause its required rate of return to O a. fluctuate less than before. O b. increase. c. decrease. d. possibly increase, possibly decrease, or possibly remain constant. O e. fluctuate more than before.
When using the two - stage dividend growth model,:Multiple Choiceg1 cannot be negative. Pt = Dt/R. g1 must be greater than g2. g1 can be greater than R. R must be less than g1 but greater than g2.
.Q1.The level of detail in a model should not depend on the application. For example, for regular work you may forecast depreciation using a growth rate, a percentage of sales, or PP&E. Choices: True or False
If a firm decreases its operating costs, all else constant, then the: A. profit margin will decrease.B. return on assets will decrease.C. total asset turnover rate will increase.D. cash coverage ratio will decrease.E. price-earnings ratio will decrease Can you give me detailed explanation?
A firm has decided to switch from FIFO to LIFO. Ceteris paribus (all things being equal), what impact will the change in accounting have on the following variables? Assume an inflationary environment. Net profit will: OA increase OB decrease OC not change OD. cannot determine
Which one of the following is an indicator that an investment is acceptable? Check all that apply: Profitability index equal 1.5 Profitability index greater than 0 the required return less than internal rate of return IRR equal to zero Payback period exceeds the required period Profitability index equal 1
The project is accepted اخترأحد الخيارات a. If the profitability index is zero b. if the profitability index is less than one c. If the profitability index is greater than hundred d. If the profitability index is negative e. None of the option What is the limitation of Traditional approach of Financial Management? اخترأحد الخيارات a. All of the option b. More emphasis on long term problems c. Ignores allocation of resources d. One-sided approach
1. A company forecast to have negative economic value added (EVA) forever, will be trading at EV/Capital ratio smaller than one. (All else equal.) True or False
DCF Methodology can be applied even if growth is not constant. Group of answer choices True False
In the MM model, as the proportion of debt in the capital structure increases, the cost of equity a. increases. b. decreases. c. remains unchanged; there is no relationship between the two. d. initially rises rapidly, then increases slowly beyond some point.
4. In the context of one-stage DCF valuation models, we must never forecast a growth rate greater than the cost of equity. a- true b - false

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According to course materials, dividend growth model is simple to use but suffers from the following drawback(s): OA. It assumes a constant growth rate. OB. It is not easy to forecast the growth rate OC. Both A and B OD. Neither A or B