When Determining the Value of a Share by the Dividend-Based

Multiple Choice

When determining the value of a share by the Dividend-Based Approach, which of the following provides the best reason for the life time of the business being the relevant timeframe over which to consider the dividend stream?

A) It is always recommended that shares be held over the long term.
B) The NPV of the future dividend stream will determine the price of the share whenever it is sold.
C) The inaccuracies inherent in this method are less of a problem than the inaccuracies inherent in other valuation methods.
D) It is easy to estimate the lifetime of a corporation based on historical averages.
E) Individuals planning to hold shares for the short term can adjust the share's value proportionally to the length of time they hold the share.