# [Solved] One of the Assumptions of the Gordon Growth Model Is

## 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

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- Q15: Using the Gordon growth model,a stock's current price decreases when A)the dividend growth rate increases. B)the required return on equity decreases. C)the expected dividend payment increases. D)the growth rate of dividends decreases.
- Q16: 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.
- Q17: 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.
- Q18: 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.
- Q19: 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.
- Q21: In the Gordon Growth Model,the growth rate is assumed to be ________ the required return on equity. A)greater than B)equal to C)less than D)proportional to
- Q22: A corporation's dividend payment is set by A)its board of directors. B)its debtholders. C)the corporation's CFO (chief financial officer). D)the stockholders themselves.
- Q23: You believe that a corporation's dividends will grow 5% on average into the foreseeable future. If the company's last dividend payment was $5 what should be the current price of the stock assuming a 12% required return?
- Q24: What rights does ownership interest give stockholders?
- Q25: In asset markets,an asset's price is A)set equal to the highest price a seller will accept. B)set equal to the highest price a buyer is willing to pay. C)set equal to the lowest price a seller is willing to accept. D)set by the buyer willing to pay the highest price.

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