45. Which of the following statement is not true about comparison between divide

Question

45. Which of the following statement is not true about comparison between dividend growth CAPM? model (DGM) and A. DGM is only applicable to companies currently paying dividends B. CAPM is applicable to all companies if we can compute beta C. DGM is appropriate when dividends aren't growing at a constant rate CAPM has to estimate beta and expected market premium CAPM does explicitly consider risk and adjust for systematic risk D. E. 46. The 7 5 percent preferred stock of Home Town Brewers is selling for S45 a share. What is the firm's cost of preferred stock if the tax rate is 35 percent and the par value per share is A. 7.50 percent B. 15.92 percent C. 16.17 percent D. 16.52 percent E. 16.67 percent

Explanation / Answer

And 45 option D

CAPM estimates expected return of stockand not beta and risk premium .

Ans 46 option A

Tax rate has no effect on cost of preferred stock

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