{"id":48093,"date":"2024-04-15T22:36:17","date_gmt":"2024-04-15T22:36:17","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=48093"},"modified":"2024-04-15T22:36:17","modified_gmt":"2024-04-15T22:36:17","slug":"in-case-of-gordons-model-the-mp-for-zero-payout-is-zero-it-means-that","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-case-of-gordons-model-the-mp-for-zero-payout-is-zero-it-means-that\/","title":{"rendered":"In case of Gordon’s Model, the MP for zero payout is zero. It means that:"},"content":{"rendered":"

[amp_mcq option1=”Shares are not traded” option2=”Shares available free of cost” option3=”Investors are not ready to offer any price” option4=”None of the above” correct=”option3″]<\/p>\n

The correct answer is: C. Investors are not ready to offer any price.<\/strong><\/p>\n

Gordon’s model is a dividend discount model that is used to estimate the intrinsic value of a stock. The model assumes that the stock’s price is equal to the present value of its future dividends, discounted at a constant rate of return.<\/p>\n

If the stock pays no dividends, then the present value of its future dividends is zero. This means that the intrinsic value of the stock is also zero. Investors are not willing to pay any price for a stock that does not pay any dividends.<\/p>\n

Option A is incorrect because shares can still be traded even if they have no payout. For example, a company may issue shares that do not pay dividends in order to raise capital.<\/p>\n

Option B is incorrect because shares are not available free of cost. Investors must pay a price for shares, even if the shares do not pay dividends.<\/p>\n

Option D is incorrect because the answer is C.<\/p>\n","protected":false},"excerpt":{"rendered":"

[amp_mcq option1=”Shares are not traded” option2=”Shares available free of cost” option3=”Investors are not ready to offer any price” option4=”None of the above” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-48093","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\nIn case of Gordon's Model, the MP for zero payout is zero. 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