Which one of the following applies to the dividend growth mo

Which one of the following applies to the dividend growth model? 17) ______
A) Zero-growth stocks have no market value.
B) Even if the dividend amount and growth rate remain constant, the value of a stock can vary.
C) Stocks that pay the same annual dividend will have equal market values.

D) An individual stock has the same value to every investor.
E) The dividend growth rate is inversely related to a stock\'s market price.

Solution

Correct answer is > B) Even if the dividend amount and growth rate remain constant, the value of a stock can vary.

Rest all options are incorrect. Zero growth stock has market value. Stocks paying same dividend can have different market value. Stock value differs from individual to individual because point of entry may be different. Dividend growth rate is directly proportionate to stock price.