Question #56
Reading: Reading 20 Discounted Dividend Valuation
PDF File: Reading 20 Discounted Dividend Valuation.pdf
Page: 22
Status: Incorrect
Correct Answer: A
Your Answer: B
Question
Multi-stage dividend discount models can be used to estimate the value of shares:
Answer Choices:
A. only under a limited number of scenarios
B. only when the growth rate exceeds the required rate of return
C. under an almost infinite variety of scenarios
Explanation
Multi-stage dividend discount models are very flexible, allowing their use with an almost
infinite variety of growth scenarios.