The zero-growth dividend model:

Question

Quizplus · Accepted Answer

The zero-growth dividend model is equivalent to the valuation model for preferred stock, as both assume a constant dividend payment forever. This model is not the most accurate to use because it assumes a constant dividend payment, which may not necessarily be true for common stocks. Additionally, it does not give the highest value for a common stock because it does not account for potential future growth in dividends or earnings. Lastly, it does not assume the highest required return possible, but rather a discount rate that reflects the risk of the investment.

The Zero-Growth Dividend Model