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capella234 capella234
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4 months ago
Which of the following is TRUE about the implicit assumption of the Dividend Discount Model (DDM) that "investors are rational"?
I) It assumes that at each period of time, investors react rationally and value the shares based on what they rationally expect to receive next year.
II) It rules out "speculative bubbles" or what is colloquially known as the "bigger fool theorem."

▸ I is correct, II is incorrect.

▸ I is incorrect, II is correct.

▸ I and II are incorrect.

▸ I and II are correct.
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
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collegelife_288collegelife_288
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