Question #45
Reading: Reading 20 Discounted Dividend Valuation
PDF File: Reading 20 Discounted Dividend Valuation.pdf
Page: 18
Status: Incorrect
Correct Answer: B
Your Answer: C
Question
If we know the forecast growth rates for a firm's dividends and the current dividends and current value, we can determine the:
Answer Choices:
A. net margin of the firm
B. sustainable growth rate
C. required rate of return
Explanation
Just as we can determine the current value of the shares from the current dividends,
growth forecasts and required return, we can solve for any one of them if we know the
other three factors.