Which one of the following statements is correct?
A) Stocks can only be assigned one dividend growth rate.
B) Preferred stocks generally have variable growth rates.
C) Dividend growth rates must be either zero or positive.
D) All stocks can be valued using the dividend discount models.
E) Stocks can have negative growth rates.

Question

Quizplus · Accepted Answer

Stocks can indeed have negative growth rates, reflecting expectations of declining dividends or company performance. The other statements are incorrect because stocks can have varying dividend growth rates, preferred stocks typically have fixed dividends rather than variable growth rates, dividend growth rates can be negative, and not all stocks pay dividends, making the dividend discount model inapplicable in some cases.

Which One of the Following Statements Is Correct