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Question
Infinite growth is a problem with the dividend discount model because:a. The expected stream of dividends is infinite
b. At reasonably high discount rates, such as 12 percent, dividends received in the distant future (40 or 50 years from now) are worth very little today
c. Dividend growth rates eventually become very small
d. The statement is incorrect - infinite growth is not a problem with the dividend discount model because at reasonably high discount rates, such as 12 percent, dividends received in the distant future are worth very little today
Answer
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