A potential problem associated with the use of the dividend growth model to compute the cost of equity is that the approach explicitly considers risk.

Name: A potential problem associated with the use of the dividend growth model to compute the cost of equity is that the approach explicitly considers risk.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The dividend growth model does not explicitly consider risk; it primarily focuses on future dividend payments and growth rates without directly incorporating the company's risk factors.

A Potential Problem Associated with the Use of the Dividend