Question 289 DDM, expected and historical returns, ROE
In the dividend discount model:
P0=C1r−g
The return r is supposed to be the:
(a) Expected future total return of the market price of equity.
(b) Expected future total return of the book price of equity.
(c) Actual historical total return on the market price of equity.
(d) Actual historical total return on the book price of equity.
(e) Actual historical return on equity (ROE) defined as (Net Income / Owners Equity).