A firm does not pay any dividends at this point in time. Which valuation method should be used on this stock?
A) Residual Claimant Model
B) Variable Growth Model
C) P/E Ratio Model
D) Capital Gain Model

Question

Quizplus · Accepted Answer

The P/E Ratio Model can be used to value a stock that does not pay dividends by focusing on the company's earnings and its price-to-earnings ratio, making it suitable for firms that reinvest their earnings instead of distributing them as dividends.

A Firm Does Not Pay Any Dividends at This Point