What is the name given to the model that computes the present value of a stock by dividing next year's annual dividend amount by the difference between the discount rate and the rate of change in the annual dividend amount?
a. stock pricing model
b. equity pricing model
c. capital gain model
d. dividend growth model
e. present value model

The answer is: D) Dividend growth model

Explanation:

The dividend growth model is a stock valuation model which calculates the fair market value of stock by assuming that the stock's dividends grow at a stable rate in perpetuity.

The dividend growth model determines if a stock is overpriced or underpriced, based on the assumption that the stock's expected dividends grow at a given value (g) forever, which is subtracted from the return rate (r).

Price = Dividend / ( r – g )

answer: e

explanation:

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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