Question #89

Reading: Reading 20 Discounted Dividend Valuation

PDF File: Reading 20 Discounted Dividend Valuation.pdf

Page: 35

Status: Unattempted

Correct Answer: A

Part of Context Group: Q89-90 First in Group
Shared Context
- With respect to their statements about the use of the GGM and the H-model: A) only Moskowitz is correct. B) only Sharpless is correct. C) both are correct.
Question
Which of the following is least likely to be a characteristic of a company in the initial growth phase?
Answer Choices:
A. Low dividend payout ratio
B. High profit margin
C. Return on equity equal to the required rate of return
Explanation
Companies in the initial growth phase tend to have a return on equity higher than the required rate of return, along with high profit margins and a low dividend payout.
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