1. The purpose of using pricing models like the dividend discount or relative valuation measures to price stocks is:

A. To be knowledgeable of what should be the price of the stock before you buy or sell it

B. to take advantage of the mispricing of the stock by other investors in the market

C. to sell the stock if it is underpriced by the market

D. A and B

E. A,B and C

2. The dividend discount model can only be used by investors to price a stock if:

A. the stock pays dividends and the pattern of dividends paid is predictable

B. the growth rate of dividends is constant

C. the growth rate of dividends exceeds the required rate of return on the stock

D. A and B

E. A,B and C