Which of the following statements is FALSE?
A)We should use the general dividend discount model to value the stock of a firm with rapid or changing growth.
B)As firms mature,their growth slows to rates more typical of established companies.
C)The dividend discount model values the stock based on a forecast of the future dividends paid to shareholders.
D)The simplest forecast for the firm's future dividends states that they will grow at a constant rate,g,forever.

Question

Quizplus · Accepted Answer

The general dividend discount model is used for valuing the stock of a firm with rapid or changing growth. Therefore, statement A is false. Statements B, C, and D are all true. As firms mature, their growth rate slows down, the dividend discount model values the stock based on future dividends, and the simplest forecast for future dividends assumes they will grow at a constant rate forever.

Which of the Following Statements Is FALSE