econ 134 (ECON134)
University Of California - Davis
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University Of California|econ 134 Midterm Exam-Graded A PLUS|ECONOMICS 134
- Exam (elaborations) • 6 pages • 2020
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[6 pts] 1. Describe advantages of the two-stage FCFE model over the two-stage DDM model.


[6 pts] 2. At Litchfield Chemical Corp. (LCC), a director of the company said that the use of dividend discount models by investors is “proof” that the higher the dividend, the higher the stock price.
a.	Using a constant-growth dividend discount model as a basis of reference, evaluate the director’s statement.
b.	explain how an increase in dividend payout would affect each of the following (holdin...
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