Respond true or false to the following statements relating to the dividend discount model: a. The dividend
Question:
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 ____
Step by Step Answer:
Investment Valuation Tools And Techniques For Determining The Value Of Any Asset
ISBN: 9781118011522
3rd Edition
Authors: Aswath Damodaran