Theoretically, the value of a stock should equal the sum of the present value of future expected dividends, discounted at the cost of equity.

Name: Theoretically, the value of a stock should equal the sum of the present value of future expected dividends, discounted at the cost of equity.
Brand: Quizplus
Rating: 4.8 (35 reviews)

Question

Quizplus · Accepted Answer

This is known as the dividend discount model, a widely used valuation method in finance. It assumes that the value of a stock is primarily determined by the expected future cash flows in the form of dividends.

Theoretically, the Value of a Stock Should Equal the Sum