If the Gordon Growth Model took the uncertainty about future dividends into account, the price of a stock would be _____, ceteris paribus.

Question

Quizplus · Accepted Answer

The Gordon Growth Model (GGM) assumes a constant growth rate in dividends per share. If it were to account for uncertainty about future dividends, it would likely lead to a higher required rate of return by investors to compensate for the increased risk, which in turn would lower the stock price, ceteris paribus.

If the Gordon Growth Model Took the Uncertainty About Future