The constant growth formula for stock valuation does not work for a firm with a negative growth rate (i.e., a declining growth rate)in its dividend.

Name: The constant growth formula for stock valuation does not work for a firm with a negative growth rate (i.e., a declining growth rate)in its dividend.
Brand: Quizplus
Rating: 4.9 (43 reviews)

Question

Quizplus · Accepted Answer

The constant growth formula can still be applied to a firm with a negative growth rate, as long as the growth rate is less than the required rate of return.

The Constant Growth Formula for Stock Valuation Does Not Work