The discounted dividends valuation model states that the value of a share of stock is the present value of its future dividends.

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The statement accurately describes the discounted dividends valuation model, which is commonly used in finance to determine the fair value of a stock based on its expected future cash flows in the form of dividend payments. Under this model, the value of a share of stock is equal to the sum of its expected future cash flows discounted to their present value using an appropriate rate of return. Dividends are a major component of this cash flow, and their expected amount and timing are critical inputs in the model.

The Discounted Dividends Valuation Model States That the Value of a Share