According to the dividend‑growth model, the value of a common stock depends on
1) the price of the stock
2) investors' required rate of return
3) the future growth in dividends
A)1 and 2
B)1 and 3
C)2 and 3
D)all three

Question

​According to the dividend‑growth model, the value of a common stock depends on ​
1) the price of the stock
2) investors' required rate of return
3) the future growth in dividends
A)​1 and 2
B)​1 and 3
C)​2 and 3
D)​all three

Quizplus · Accepted Answer

The dividend-growth model determines the value of a stock based on the investors' required rate of return and the expected future growth in dividends. The price of the stock is what the model aims to calculate, not an input into the model.

​According to the Dividend‑growth Model, the Value of a Common

According to the Dividend‑growth Model, the Value of a Common