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Consider two companies, Company A and Company B, both experiencing high growth rates in dividends. Company A's dividend growth rate is expected to decline linearly over time until it reaches a stable growth rate, while Company B's dividend growth rate is expected to remain high for a specific period and then abruptly shift to a stable growth rate. Which valuation models would be most appropriate for each company?

• Company A: H-Model ; Company B: Two-Stage Dividend Discount Model

• Company A: Two-Stage Dividend Discount Model ; Company B: H-Model

• H-Model for both Company A and Company B

• Two-Stage Dividend Discount Model for both Company A and Company B

g in the Gordon Growth model refers to ___

• share price

• dividend rate

• capital appreciation

• all the above

The higher the discount rate, the lower the present value of the cash flows.

• True

• False

Which of the following is not a growth falls stages?

• Growth phase

• Transition phase

• Mature phase

• Dividend phase

Discounted Valuation Technique is a ___ financial analysis tool that tells you the present value of future cash flows.

The value of a stock can be analyzed as the sum of ___

• the value of the company without earnings reinvestment, the present value of growth opportunities (PVGO).

• a company without positive expected NPV.

• a positive NPV.

• the no-growth value per share.

What is the Three-Stage Dividend Discount Model?

• A valuation method used to evaluate the potential value of a stock based on its current market price.

• A model that assumes a company's stock price is based on the present value of its future cash flows, specifically the dividends that will be paid out to investors over time.

• A model that assumes a company's stock price is based on its past performance.

• A model that assumes a company's stock price is based on its revenue growth rate.

All alternative streams of expected cash flows can be used to value equities, including dividends, free cash flow, and residual income.

• True

• False

Malaysia also accounts for ___ of the exports of oil and fats.

• 39%

• 44%

• 27%

• 12%

If, annual dividend = 2.75 ;

then, required return = risk free rate + beta × market risk premium

= 2% + 0.5 × 7%

= 5.5%

Assuming a dividend growth rate of 4%, calculate the intrinsic value of the stock.