The stock valuation model that determines the current stock price by dividing the next annual dividend amount by the excess of the discount rate less the dividend growth rate is called the _____ model.

Question

Quizplus · Accepted Answer

The Dividend Growth Model, also known as the Gordon Growth Model, calculates the value of a stock by dividing the next year's dividends by the discount rate minus the dividend growth rate. This model assumes that dividends will continue to grow at a constant rate indefinitely.

The Stock Valuation Model That Determines the Current Stock Price