Equity Investments Q223

0. A decrease in the dividend payout ratio will most likely decrease the intrinsic value when using a(n):

  • Option : C
  • Explanation : A decrease in the dividend payout ratio will decrease the cash expected to be distributed to shareholders. The Dividend discount model is the present value of the cash expected to be distributed to shareholders. Therefore a decrease in the dividend payout ratio will decrease the intrinsic value in a present value model.
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