According to the dividend-growth model,the valuation of common stock depends on
1)the firm's dividends
2)investors' required rate of return
3)the prior year's dividends

Question

Quizplus · Accepted Answer

The dividend-growth model, also known as the Gordon growth model, values a company's common stock based on its expected future dividends and the investor's required rate of return. The model assumes that the dividends will grow at a constant rate indefinitely, and the value of the stock is calculated as the present value of all future dividends. Therefore, the model takes into account both the firm's dividends (1) and the investors' required rate of return (2) but does not consider the prior year's dividends (3).

According to the Dividend-Growth Model,the Valuation of Common Stock Depends