Which of the following is an underlying assumption of the constant growth dividend discount model (DDM)?
A) Dividends have a constant growth rate
B) The constant growth rate of dividends will continue for an infinite time period
C) The required rate of return is greater than the expected growth rate
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

The constant growth dividend discount model assumes that dividends have a constant growth rate (A), that this growth rate will continue for an infinite time period (B), and that the required rate of return is greater than the expected growth rate (C). Therefore, all of the above (D) are underlying assumptions of the model.

Which of the Following Is an Underlying Assumption of the Constant