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7 June, 18:52

The dividend growth model: Multiple Choice is only as reliable as the estimated rate of growth can only be used if historical dividend information is available. applies only when a company is currently paying dividends considers the risk that future dividends may vary from their estimated values. is based solely on historical dividend information

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  1. 7 June, 18:56
    0
    The correct answer is letter "A": is only as reliable as the estimated rate of growth.

    Explanation:

    The dividend growth model, also known as the Gordon Growth Model or GGM, is used to calculate the intrinsic value of a stock today, based on the stock's expected future dividends. The model is most effective when used for large, stable companies in mature markets that have a predictable rate of dividend growth. However, the model ignores factors that affect the market price of a stock such as new products, competition, and investor sentiment.
  2. 7 June, 19:07
    0
    Answer: The correct answer is "is only as reliable as the estimated rate of growth".

    Explanation: The dividend growth model: is only as reliable as the estimated rate of growth because the growth model is a method to assess the price of a company's stock using constant growth and discounting the value of future dividends today.

    This happens because it assumes that the growth that the company will experience is constant.
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