The dividend‑growth model cannot be adjusted for changes in growth rates or changes in risk.

Question

The dividend‑growth model cannot be adjusted for changes in growth rates or changes in risk.​

Quizplus · Accepted Answer

The dividend-growth model can be adjusted for changes in growth rates and changes in risk by adjusting the inputs, such as the dividend growth rate and the required rate of return. However, it is important to note that the assumptions of the model may not hold in all situations and alternative valuation methods may be more appropriate.

The Dividend‑growth Model Cannot Be Adjusted for Changes in Growth