The cost of capital for common stock is Ke = (D1/Po) + g.What are the assumptions of the model?
A) Growth (g) is constant to infinity
B) The price earnings ratio stays the same
C) The firm must pay a dividend to use this model
D) Dividends are tax deductible
Correct Answer:
Verified
Q12: An issue of common stock has just
Q13: The cost of common stock is usually
Q15: Valuation of financial assets requires knowledge of:
A)
Q16: An issue of common stock is expected
Q18: The market allocates capital to companies based
Q19: The value of a common stock is
Q20: Which is a characteristic of the cost
Q21: A bond pays 9% yearly interest in
Q22: A higher interest rate (discount rate)would:
A) increase
Q97: The dividend valuation model stresses the
A) importance
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