Which of the statements below is FALSE?
A)Shortcomings of the dividend pricing models suggest that we need a pricing model that is more inclusive and that can estimate expected returns for stocks without the need for a stable dividend history.
B)A firm's dividend in 2008 was less than its dividend in 2003.This means that the estimated growth rate is negative,and this produces a negative expected return.
C)The dividend models (growth or constant dividend)appeal to a fundamental concept of financial assets,that is,the value of the financial asset is determined by the future cash flow the owner is entitled to while holding the asset.
D)Lack of a dividend pattern is not a problem for the dividend models to work.

Question

Quizplus · Accepted Answer

This statement is false because lack of a dividend pattern makes it difficult for dividend models to estimate expected returns accurately.

Which of the Statements Below Is FALSE