Suppose that the current dividend for a stock is Dtoday, the expected dividend growth rate is r, and the interest rate is i. If we ignore risk, which of the following represents the dividend- discount model formula for the fundamental price of a stock?
A. Dtoday (1 + g) / (i - g)
B. Dtoday / (i - g)
C. Dtoday / (i + g)
D. (i + g) / Dtoday
Answer: A
You might also like to view...
Which US President was in office during World War I?
a. Grover Cleveland. b. Herbert Hoover. c. Abraham Lincoln. d. Woodrow Wilson.
In the case of public goods, _____
a. the free rider problem does not arise b. one person's consumption of the good reduces the consumption of the good by others c. individuals can be easily excluded from consuming the good once it is provided d. the quantity produced by a private market would be too large from society's viewpoint e. the principle of mutual excludability and principle of rivalry do not apply
The change in nominal GDP will always exceed the change in real GDP when nominal GDP is
a. increasing and prices are unchanged. b. increasing and prices are decreasing. c. decreasing and prices are decreasing. d. increasing and prices are increasing.
Refer to the diagram. The profit-maximizing level of output for this firm:
A. is at point a.
B. is at point b.
C. is at point c.
D. cannot be determined from the information given.