The constant growth model assumes which of the following?
A) that there is privately held information
B) that the stock is efficiently priced
C) that there are executive stock options available to managers
D) that there is no restricted stock

Question

Quizplus · Accepted Answer

The constant growth model, often associated with the dividend discount model (DDM), assumes that a stock is efficiently priced, reflecting all publicly available information. This model calculates the intrinsic value of a stock based on the present value of its future dividends, which are expected to grow at a constant rate. It does not specifically concern itself with privately held information, executive stock options, or the presence of restricted stock.

The Constant Growth Model Assumes Which of the Following