Under the constant dividend growth model, it is possible for a negative stock value to result.

Question

Quizplus · Accepted Answer

The constant dividend growth model, also known as the Gordon Growth Model, assumes a perpetual growth of dividends at a constant rate. Given this assumption, the model does not allow for a negative stock value, as it calculates present value based on positive future cash flows. Negative stock values are not feasible under this model's framework.

Under the Constant Dividend Growth Model, It Is Possible for a Negative