Question: About DDM, which statement is NOT CORRECT? The risk-adjusted discount rate in DDM can be used as cost of equity. DDM cannot explain the following

About DDM, which statement is NOT CORRECT?

The risk-adjusted discount rate in DDM can be used as cost of equity.

DDM cannot explain the following fact: stocks that don't pay dividend, such as, Amazon, Google, Facebook, etc., still have huge value.

By Dividend Discount Model (DDM), if a company is expected to never ever pays any cash in the future, its stock should be worth zero.

The stock price computed by DDM is ex-dividend price, meaning the price after the current dividend is paid out.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

You have until 6:18 PM to complete this assignment. Part 1 Attempt 1/2 for 10 pts. About DDM, which statement is NOT CORRECT? By Dividend Discount Model (DDM), if a company is expected to never ever...

Q:

Questions: i. Rank the projects on the basis of the measurements discussed above. ii. Was Smith correct in stating that all of the measurements necessarily would result in the same ranking order?...

Q:

will thumbs up for correct answer, thank you! About DDM, which statement is NOT CORRECT? The stock price computed by DDM is ex-dividend price, meaning the price after the current dividend is paid...

Q:

every other post i searched of this question is incorrect About dividend and DDM, which statements are CORRECT? Check all that apply: In DDM, the risk-adjusted discount rate can be used as cost of...

Q:

Assume that b > c (not everyone ought to trade). Let ms(vs) and mb(vb) denote a seller's probability of selling and a buyer's probability of buying, respectively. Let ts(vs) and tb(vb) denote a...

Q:

Parmacheenee Belle's entire common stock portfolio ($500,000) is allotted to an index fund tracking the Standard & Poors 500 index. The expected rate of return on the index is 9.5% and the standard...

Q:

i need to know how to use the data in the "USEC Case" to calculate the table in the "6200 FINAL CASE". FINAL CASE ANALYSIS - USEC INC. Eric Taylor June 21, 2012 Why is USEC pursuing the ACP? Briefly...

Q:

Please help with these multiple choice questions Question 1 Which of the following ratios would be used to assess the liquidity of a company? (i) Return on capital employed (ii) Gross profit...

Q:

About dividend and DDM, which statements are CORRECT? Check all that apply: 1.By Dividend Discount Model (DDM), if a company is expected to never ever pays any cash in the future, its stock should be...

Q:

Is each of the following statements true or false? Explain your answers briefly. a. Using the same risk-adjusted discount rate to discount all future cash flows ignores the fact that the more distant...

Q:

Sam is operating a small clinic. There are 2 doctors in the clinic. Each doctor diagnoses the patients independently. Patients arrive to each doctor as two independent Poisson processes. The arrival...

Q:

A certain gas laser can emit light at wavelength 550 nm, which involves population inversion between ground state and an excited state. At room temperature, how many moles of neon are needed to put...

Q:

on Thursday, April 2 7 , the board of directors of ABC declares a 3 5 - cent - per - share dividend to shareholders of record as of Tuesday, May 2 3 . the dividend will be paid on Wednesday, June 7 ....

Q:

In organizational conflict, scarce resources are typically identified as: a form of differentiation. a third - party conflict resolution strategy. a source of conflict. a form of task...

Q:

During the early stages of an intercultural relationship, be conscious of the ways you reduce uncertainty, keeping in mind that people from other cultures (e.g., high vs. low context) reduce...

Q:

Regarding Question #2, how do these groups manage and address their conflict?

Q:

What irritates you the most about how others handle conflict? Why?