It is considered unlikely that the dividend growth and the SML approaches will result in different estimates of the cost of equity for a given firm

Question

Quizplus · Accepted Answer

The dividend growth model (DGM) and the Security Market Line (SML) approach can result in different estimates of the cost of equity for a given firm because they rely on different assumptions and inputs. The DGM focuses on dividends and growth rates, while the SML approach uses the risk-free rate, the market return, and the beta of the stock.

It Is Considered Unlikely That the Dividend Growth and the SML