What is the model called that determines the market value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate? Maximal-growth model Constant-growth model Capital pricing model Realized-earnings model Realized-growth model

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teixeirasage6171 teixeirasage6171

28-10-2020
Business

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What is the model called that determines the market value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate? Maximal-growth model Constant-growth model Capital pricing model Realized-earnings model Realized-growth model

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topeadeniran2 topeadeniran2 · Answer 1 · 2020-10-29T02:32:29+01:00

Answer: Constant growth model

Explanation:

The constant growth model, is also referred to as the Gordon Growth Model, and it is used to know the value of a stock.

The assumption with regards toa constant growth model is that the dividends of a company's will increase at a constant growth rate.

The constant growth model determines the market value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate.