Question: The value of common stocks cannot be tied to the present value of future dividends because most firms dont pay dividends. Comment on the validity,

The value of common stocks cannot be tied to the present value of future dividends because most firms don’t pay dividends. Comment on the validity, or lack thereof, of this statement. Discuss.

Step by Step Solution

★★★★★

3.40 Rating (172 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

It is true that most stocks dont pay dividends and ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

453-B-C-F-S-V (392).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

In the 1973-1975 recession, the value of common stocks in real terms fell by nearly 50%. How might this decline in the stock market have affected aggregate demand and thus contributed to the severity...

During the 2007-2009 recession, the value of common stocks in real terms fell by more than 50%. How might this decline in the stock market have affected aggregate demand and thus contributed to the...

In the 20072009 recession, the value of common stocks in real terms fell almost 50%. How might this decline in the stock market have affected aggregate demand and thus contributed to the severity of...

The value of common stocks cannot be tied to the present value of future dividends because most firms dont pay dividends. Comment on the validity, or lack thereof, of this statement.

Q uestion A. The value of ordinary shares cannot be tied to the present value of future dividends because most companies dont pay dividends. Comment on the validity, or lack thereof, of this...

10. Corporate valuation model The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The...

Hi I am finding this problem challenging, can I ask for how to do this problem? Thanks! 10. Corporate valuation model The corporate valuation model, the price-to-earnings (P/E) multiple approach, and...

8. Nonconstant growth stock Aa Aa As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth...

A plank 12 ft long is used as an inclined plane to a platform 3.0 ft high. (a) What force must be used to push a load weighing 480 lb up the plank? (b) Find the MA of the inclined plane.

A student who worked for Chipotle stated: I love the Chipotle standard that what's best for the people (employees) is best for the company and vice versa, so I always strive to do my best. It sounds...

Undertaking any transaction in which foreign currency payment is going to be made in the future can lead to what type of exchange rate risk? Forward Translation Transaction Economic

What is so bad about bubbles? If the price of Internet stocks or housing rises and then falls, is that such a big problem? After all, some people say, most of the gains going up are paper gains and...

As part of your duties at Apex Financial Ltd. you have been asked to review the analysis carried out by a rival companyPrime Groupof the WX Media Company. WX has had a constant P/E ratio for the past...

Selkirk Inc. has an expected profit margin of 10 percent, turnover ratio of 1.8, and a leverage ratio of 0.30. The leading EPS is $2.50 and the firm uses a dividend payout ratio of 35 percent. The...

Larch Foods Inc.'s current dividend is $4.00. Dividends are expected to decline by 4 percent per year for the next three years, and then remain constant thereafter. The required rate of return for...

4. Run Pearson's r to assess the relationship between Attractiveness and Happiness: a. Report your Pearson's r value. According to the p-Value, is this relationship significant or non-significant? c....

Bourne Freestyle has cost of goods sold of $ 9 2 , 5 1 1 , interest expense of $ 4 , 6 0 8 , dividends paid of $ 3 , 2 0 0 , depreciation of $ 1 4 , 5 6 8 , an increase in retained earnings of $ 1 1...

A newly issued bond pays its coupons once a year. Its coupon rate is 5.9%, its maturity is 20 years, and its yield to maturity is 8.9%. a. Find the holding-period return for a one-year investment...