Question 10 Which one of the followings is NOT a drawback of DGM (Dividend Growth Model)? a. The model requires calculating a discount rate re b. In the long run, dividends may reveal very little about the firm's equity value c. Predicting dividends for growth firms is tedious task he applicable to all companies

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.