The stock valuation model D1/(rcs - g)requires the stock to grow at a rate greater than the required return; otherwise,the stock is worthless.

Question

Quizplus · Accepted Answer

The stock can still have value even if its growth rate is lower than the required return. The model assumes constant growth, but in reality, the growth rate can change over time. Additionally, the model does not take into account other factors that can affect a stock's value, such as dividends or market conditions.

The Stock Valuation Model D1/(rcs - G)requires the Stock to Grow