The required rate of return estimated by the Capital Asset Pricing Model is not suitable for use in dividend valuation models.

Question

Quizplus · Accepted Answer

The required rate of return estimated by the Capital Asset Pricing Model (CAPM) is suitable for use in dividend valuation models as it represents the expected return necessary to compensate for the risk of an investment, which is a key input in calculating the present value of future dividends.

The Required Rate of Return Estimated by the Capital Asset