Respond true or false to the following statements relating to the dividend discount model:

a. The dividend discount model cannot be used to value a high-growth company that pays no dividends.

True ____ False ____

b. The dividend discount model will undervalue stocks, because it is too conservative.

True ____ False ____

c. The dividend discount model will find more undervalued stocks when the overall stock market is depressed.

True ____ False ____

d. Stocks that are undervalued using the dividend discount model have generally made significant positive excess returns over long time periods (five years or more).

True ____ False ____

e. Stocks that pay high dividends and have low price-earnings ratios are more likely to come out as undervalued using the dividend discount model.

True ____ False ____