Which of the statements below is FALSE?
A)The dividend model requires that a firm have a cash dividend history and that the dividend history shows a constant dividend or a positive growth in dividends.
B)A problem with using the dividend growth model is that it appears to underestimate the expected return for some stocks.
C)A problem with using the dividend growth model is that it produces a negative expected return whenever a firm cuts its dividends.
D)A problem with using the dividend growth model is that it appears to underestimate the expected return for all stocks.

Question

Quizplus · Accepted Answer

The statement "A problem with using the dividend growth model is that it appears to underestimate the expected return for all stocks" is false. The dividend growth model is a widely accepted way to estimate the fair value of a stock based on its dividend history and growth rate. While it may underestimate the expected return for some stocks, it is not true for all stocks.

Which of the Statements Below Is FALSE