The dividend valuation model (DVM) cannot accommodate which of the following assumptions?
A) constant dividends
B) a constant growth rate of dividends less than the required rate of return
C) a constant growth rate of dividends greater than the required rate of return
D) dividends growing at a variable rate

Question

Quizplus · Accepted Answer

The dividend valuation model (DVM) assumes that dividends grow at a rate that is less than the required rate of return. If dividends were to grow at a rate greater than the required rate of return, the model would produce unrealistic and infinite values, making it inapplicable.

The Dividend Valuation Model (DVM) Cannot Accommodate Which of the Following