In dividend discount models (DDM) with supernormal growth, supernormal growth may continue indefinitely.

Name: In dividend discount models (DDM) with supernormal growth, supernormal growth may continue indefinitely.
Brand: Quizplus
Rating: 4.8 (34 reviews)

Question

Quizplus · Accepted Answer

Supernormal growth by definition is a period of high growth above the long-term sustainable rate, and is expected to slow down over time as the company reaches its mature stage. Therefore, it is not feasible for supernormal growth to continue indefinitely in a DDM.

In Dividend Discount Models (DDM) with Supernormal Growth, Supernormal Growth