Which of the following statements regarding dividend discount models is not true?
A) Different investors often use different discount rates in their calculation.
B) Future benefits are uncertain and must be estimated.
C) Few money managers use the model to estimate intrinsic value.
D) The models are based on estimates.

Question

Quizplus · Accepted Answer

The statement that few money managers use the model to estimate intrinsic value is not true. Many money managers and investors use dividend discount models (DDMs) as a fundamental analysis tool to estimate the intrinsic value of a company's stock by predicting the dividends the company will generate in the future.

Which of the Following Statements Regarding Dividend Discount Models Is