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Understanding the Differential Growth Model—Basics

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Which of the following statements is/are true about dividend growth in organizations, necessitating using the differential growth model? Select ALL that apply.

A

The model is needed because companies rarely provide growth in returns (via dividends) at a constant rate.

B

The model is needed because companies may grow at rapid, irregular rates for a few years, then stabilize.

C

The model is needed because companies may grow at a regular rate, then experience a period of recession, compression, or stagnation and not grow at all.

D

The model is needed because companies always grow in a predictable linear fashion with consistent dividend returns for investors.