[Solved] Using the Gordon Growth Model,a Stock's Current Price Decreases When

Using the one-period valuation model,assuming a year-end dividend of $1.00,an expected sales price of $100,and a required rate of return of 5%,the current price of the stock would be A)$110.00. B)$101.00. C)$100.00. D)$96.19.

In the generalized dividend model,if the expected sales price is in the distant future A)it does not affect the current stock price. B)it is more important than dividends in determining the current stock price. C)it is equally important with dividends in determining the current stock price. D)it is less important than dividends but still affects the current stock price.

In the generalized dividend model,a future sales price far in the future does not affect the current stock price because A)the present value cannot be computed. B)the present value is almost zero. C)the sales price does not affect the current price. D)the stock may never be sold.

In the generalized dividend model,the current stock price is the sum of A)the actual value of the future dividend stream. B)the present value of the future dividend stream. C)the present value of the future dividend stream plus the actual future sales price. D)the present value of the future sales price.

Using the Gordon growth model,a stock's current price will increase if A)the dividend growth rate increases. B)the growth rate of dividends falls. C)the required rate of return on equity rises. D)the expected sales price rises.

In the Gordon growth model,a decrease in the required rate of return on equity A)increases the current stock price. B)increases the future stock price. C)reduces the future stock price. D)reduces the current stock price.

Using the Gordon growth formula,if D1 is $2.00,ke is 12% or 0.12,and g is 10% or 0.10,then the current stock price is A)$20. B)$50. C)$100. D)$150.

Using the Gordon growth formula,if D1 is $1.00,ke is 10% or 0.10,and g is 5% or 0.05,then the current stock price is A)$10. B)$20. C)$30. D)$40.

Using the Gordon growth model,if D1 is $.50,ke is 7%,and g is 5%,then the present value of the stock is A)$2.50. B)$25. C)$50. D)$46.73.

One of the assumptions of the Gordon Growth Model is that dividends will continue growing at ________ rate. A)an increasing B)a fast C)a constant D)an escalating