Abnormal earnings growth valuation model

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Which is correct regarding the Abnormal Earnings Growth valuation model?

a. Because the model incorporates cumulative dividend earnings, it is not appropriate for valuing firms that don’t pay dividends. – Measures comprehensive dividends and because of drip you can use it for firms that do no not pay dividends

b. A firm that, on average, has earned more than its Ke has negative AEG.

c. During periods when Residual Income is increasing, AEG is positive for those periods.

d. A firm with forecast earnings growth less than Ke will increase shareholder value by decreasing dividends.

e. During periods when Residual Income is declining, AEG is positive for those periods.

Reference no: EM131566186

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