One stock valuation model holds that the value of a share of stock is a function of its future dividends, and that the dividends will increase at an annual rate which will remain unchanged over time. This stock valuation model is known as the
A) approximate yield model.
B) holding period return model.
C) dividend reinvestment model.
D) constant growth dividend valuation model.

Question

Quizplus · Accepted Answer

The constant growth dividend valuation model, also known as the Gordon Growth Model, posits that the value of a stock is based on its future dividends, which are expected to grow at a constant rate indefinitely.

One Stock Valuation Model Holds That the Value of a Share