In calculating the cost of common stock equity
A) the use of the capital asset pricing model (CAPM) is often preferred, because the data required are more readily available.
B) the use of the CAPM is preferred, because it more directly calculates risk.
C) the use of the constant growth valuation model is often preferred, because the data required are more readily available.
D) the use of the constant growth valuation model is often preferred, because it has a stronger theoretical foundation.

Question

Quizplus · Accepted Answer

The constant growth valuation model is often preferred because it requires readily available data such as dividends and growth rates, making it easier to apply in practice.

In Calculating the Cost of Common Stock Equity