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.