True or False (Provide explanation). Given the gordon growth model, the expected percentage growth in value of a stock is equal to the capital gains yield for that stock.
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[7] True or False (Provide explanation). Given the
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- 13 The value of the stock: Group of answer choices Increases as the required rate of return increases Increases as the dividend growth rate increases and increases as the required rate of return decreases Increases as the dividend growth rate increases Increases as the required rate of return decreases10.Which of the following statement on stock valuation is incorrect?a.In dividend discount model, the stock value is the present value of all future dividends.b.We may use the dividend discount model to value all firms. c.Enterprise value is the sum of equity and debt minus cash. d.We may use price-earnings ratio to compute the value to comparable firms.please respond to both. Which of the following is true about stocks? A. the dividend yield must always be positive B. the capital gains yield can never be negative. C. the capital gains yield can never be zero D. the dividend yield can never be negative According to the constant dividend growth model, which of the following is true? A. the constant growth rate is the same as the dividend yield B. The price growth rate is the same as the dividend yield C. the capital gains yield is the same as the constant dividend growth rate D. the dividend yield is the same as the capital gains yield
- Which of the following statements is true about the constant dividend growth model? Group of answer choices 1. When using a constant growth model to analyze a stock, if an increase in the required rate of return occurs while the growth rate remains the same, this will lead to no change in the value of the stock 2. When using a constant growth model to analyze a stock, if an increase in the required rate of return occurs while the growth rate remains the same, this will lead to a decreased value of the stock 3. When using a constant growth model to analyze a stock, if an increase in the required rate of return occurs while the growth rate remains the same, this will lead to a increased value of the stockwhich one is correct please confirm? QUESTION 39 The constant growth valuation model approach to calculating the cost of equity assumes that ____. a. dividends are constant b. earnings and dividends grow at a constant rate, but stock price growth is indeterminate c. earnings, dividends, and stock price will grow at a constant rate d. the growth rate is greater than or equal to kewhich one is correct please confirm? QUESTION 25 The constant growth valuation model approach to calculating the cost of equity assumes that ____. a. earnings, dividends, and stock price will grow at a constant rate b. the growth rate is greater than or equal to ke c. earnings and dividends grow at a constant rate, but stock price growth is indeterminate d. dividends are constant
- 7.In the formula r = (D1/P0) + g, what does (D1/P0) represent?a. the expected price appreciation yield from a common stock.b. the expected dividend yield from a common stock.c. the dividend yield from a preferred stock.d. the interest payment from a bond.e. None of the above.8. According to the constant growth in dividends price formula given in the textbook, if the dividend to be paidone year from today increases and all other factors remain constant, the price of the stock will __________;if the growth rate of all future dividends increases and all other factors remain constant, the price of the stockwill __________; and if the required rate of return increases and all other factors remain constant, the priceof the stock will __________.a. decrease; decrease; decreaseb. increase; increase; decreasec. decrease; increase; decreased. increase; increase; increasee. None of the answers listed above are correct.9. Which of the following is correct about the equilibrium price of a $1,000…Which one of the following is an underlying assumption of the dividend growth model? - A stock's value changes in direct relation to the required return. - A stock has the same value to every investor. - The dividend growth rate is inversely related to a stock's market price. - A stock's value is equal to the discounted present value of the future cash flows that it generates. - Stocks that pay the same annual dividend have equal market values.Which statement is false regarding the Capital Asset Pricing Model? A. The beta coefficient of a stock is constant. B. The risk free rate is usually based on the treasury bill yield. C. Market risk premium is the difference between market return and the risk free rate. D. The cost of retained earnings is equal to the cost of new shares issued.
- The required returns of Stocks X and Y are rX = 10% and rY = 12%. Which of the following statements is CORRECT? 1. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. 2. The stocks must sell for the same price. 3. Stock Y must have a higher dividend yield than Stock X. 4. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. 5. If the market is in equilibrium, and if Stock Y has the lower expected dividend yield, then it must have the higher expected growth rate.You know that the return of Sandhill Cyclicals common shares is 1.2 times as sensitive to macroeconomic information as the return of the market. If the risk-free rate of return is 5.00 percent and market risk premium is 5.71 percent, what is Sandhill Cyclicals’ cost of common equity capital? - Cost of common equity capital =?%The dividend yield (i.e. D1/P0) is a good measure of the expected return on a common stock under which of the following circumstances? g = 0 g > 0 g < 0 g is expected to remain constant over time under no circumstances