Question

The growth rate of dividends can be found using __________. (Select all that apply)

a) Historical dividend growth rates
b) The perpetuity model
c) The capital asset pricing model
d) Security analysts' forecasts

Answer 1

The growth rate of dividends can be found using historical dividend growth rates, the perpetuity model, and security analysts' forecasts. Hence, options (a), (b), and (d) are correct.

Step-by-step explanation:

The growth rate of dividends can be found using historical dividend growth rates, the perpetuity model, and security analysts' forecasts.

Historical dividend growth rates involve analyzing the past dividend payments of a company to determine the rate at which they have been increasing over time. This can provide insights into the future growth rate.

The perpetuity model is a valuation method that can also be used to estimate the growth rate of dividends. It assumes that dividends will grow at a constant rate indefinitely.

Lastly, security analysts' forecasts can provide predictions of future dividend growth rates based on their analysis of a company's financial performance and industry trends.