CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

A no-growth dividend discount model is ______.
A. value = price earnings ratio
B. value = market value of firm / book value of firm on replacement cost basis
C. equity = dividends / rate of return

User Contributed Comments 8

User Comment
sbajaj what is the explanation for this answer choice??
virashe in case of no growth dividend, it becomes a perpetuity. The value of a perpetuity is simply 1 / K. In this case it will be D / k.
ehc0791 is equity the same as value ?
Tomas Equity is the value of a company. (assets=liabilities+equity). In case of a stock equity = its value.
kamil77 If Equity = dividends / rate of return, then
rate of return = dividends / Equity, which is exactly the case as no portion of dividends is retained
johnj ref virashe, u say perpetuity is 1/k, but with no dividends, it would be 0/k
CFAwriter no-growth dividend means dividend remains constant, but not 0.
Inaganti6 WONDERFUL QUESTION REALLY
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