According to the constant dividend growth model, a stock price should equal the:
A)Sum of all future dividends
B)Sum of dividends to be received within the investor's holding period
C)Dividend yield plus the constant growth rate
D)Sum of all discounted future dividends

Question

Quizplus · Accepted Answer

According to the constant dividend growth model, the stock price equals the sum of all discounted future dividends. This formula takes into account the expected future dividends, their growth rate, and the required rate of return. Thus, the correct option is D, sum of all discounted future dividends.

According to the Constant Dividend Growth Model, a Stock Price