Which of the following items is not a characteristic of a common stock?

a. It offers the chance for the firm to remain in business forever

b. It gives the owner priority if the firm files for bankruptcy

c. It represents a claim against future common dividends

d. Its market value is constantly changing

e. It represents ownership in the firm

Under which of the following circumstances can you not use the DDM to value a stock?

a. When the dividend is not expected to grow

b. When the dividend growth rate is higher than the required return to the stock

c. During an economic contraction

d. When interest rates are higher than stock returns

e. When the dividend is expected to grow at a non-constant rate

Based on the DDM, if the required return on a stock increases, what will happen to the stocks price?

a. It will increase

b. It will remain the same

c. It will either increase or decrease

d. There is not sufficient information to answer this question

e. It will decrease

Based on the DDM, if the dividend growth rate increases, what will happen to the stocks price?

a. It will decrease

b. There is not sufficient information to answer this question

c. It will increase

d. It will either increase or decrease

e. It will remain the same