The current value of a common stock depends primarily on the present value of current earnings per share and the discount rate.

True

False

If the market is in equilibrium, the market value of a common share should always equal its book value.

True

False

All common shares in an equivalent risk class should be priced to offer the same expected return, if the market is in equilibrium.

True

False

Which one of the following is correct concerning the nonconstant dividend growth model?

		The first growth rate must be higher than the second growth rate.
		The time value of money is ignored.
		The discount rate ignores the risks associated with an individual firm.
		The discount rate considers the risk-free rate of return.