The dividend discount model indicates that the value of a stock is the present value of the dividends it will pay over the investor's horizon, plus the present value of the expected stock price at the end of that horizon.

Question

Quizplus · Accepted Answer

The dividend discount model calculates the value of a stock by discounting the future cash flows (dividends) and the expected stock price at the end of the investor's horizon to their present values. Therefore, the given statement is true.

The Dividend Discount Model Indicates That the Value of a Stock