The below screen shot indigenous Google Finance shows the simple stock info for Kraft foodstuffs Inc. After the near of the stock industry on might 30, 2008. What is the highest that the stock has traded in ~ in the last 12 months?
You inserted an stimulate to acquisition stock where you mentioned the best price you were willing to pay. This form of stimulate is recognized as a:
According to the constant dividend growth model, the worth of the firm relies on the existing dividend level, divided by the required rate of return to add the flourish rate.
You are watching: Which of the following statements is true about the constant growth model
We cannot usage the general dividend-discount model to value the stock of a firm with rapid or changing growth also if you have the right to estimate future intended dividends well.
During periods of high growth, that is not inexplicable for firms come pay out 100% of their earnings to shareholder in the form of dividends.
Classified stock differentiates various classes of usual stock, and also using the is one method companies can meet impairment such as once owners of a start-up for sure need added equity capital however don"t desire to relinquish voting control.
The dividend discount design for constant growth firms deserve to be used for firms that have expected negative, however constant, expansion rates.
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Stock A has a forced return of 10% and a price the $25, and also its dividend is meant to grow at a consistent rate that 7% every year. Share B has actually a required return that 12% and a price that $40, and its dividend is intended to grow at a consistent rate the 9% per year. I m sorry of the adhering to statements is CORRECT?
Stocks A and also B have the same forced return that 15% and also the same price, $25. Share A"s dividend is supposed to grow at a consistent rate of 10% per year, while share B"s dividend is supposed to prosper at a consistent rate of 5% every year. I beg your pardon of the complying with statements is CORRECT?
Stocks A and B have the very same price, but Stock A has actually the higher required rate of return. I m sorry of the adhering to statements is CORRECT?
If share A has actually a reduced dividend yield than Stock B, the expected resources gains yield should be greater than stock B"s.
A share is intended to salary a year-end dividend of $2.00, i.e., D1 = $2.00. The dividend is meant to decline at a rate of 5% a year forever (g = -5%). If the company"s expected and also required price of return is 15%, i beg your pardon of the adhering to statements is CORRECT?
If two continuous growth stocks have the same price and the same compelled rate the return, which of the adhering to statements is CORRECT?