Question #133
Reading: Reading 20 Discounted Dividend Valuation
PDF File: Reading 20 Discounted Dividend Valuation.pdf
Page: 54
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Question
The three-stage dividend discount model (DDM) allows for an initial period of:
Answer Choices:
A. high growth, a transitional period of stable growth and a final declining growth phase
B. stable growth, a transitional period of high growth and a final declining growth phase
C. high growth, a transitional period of declining growth and a final stable growth phase
Explanation
The three-stage DDM combines the features of the two-stage DDM and the H model. It
allows for an initial period of high growth, a transitional period of declining growth and a
final stable growth phase.