In applying the constant dividend model with infinite horizon to price a stock for purchase,we assume the company will pay dividends forever and that we will hold onto our stock forever.

Question

Quizplus · Accepted Answer

The constant dividend model with infinite horizon assumes that the company will pay dividends forever, and that the investor will hold onto their stock forever. This is the basis for the perpetuity formula used in the model.

In Applying the Constant Dividend Model with Infinite Horizon to Price