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Hi Dear tutor, I have a question.
I selected choice a because the others are not correct from my own point of view and though a is correct if others wrong.I really did not catch choce A need explanation?
A is indeed correct.
It is the shareholders required rate of return that determines the market value of shares. The dividend growth model uses that required rate of return.
Any individual shareholders who wants a higher return (or who will accept a lower return) will have chosen to invest elsewhere.
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