In the general dividend-valuation model, the price of a share of stock is the present value of all expected future dividends.

Question

Quizplus · Accepted Answer

The general dividend-valuation model assumes that the price of a share of stock is equal to the present value of all expected future dividends. This model is based on the principle that investors buy stocks for the future income they are expected to provide, and that the value of these expected dividends can be discounted to their present value using an appropriate discount rate. Therefore, the statement is true.

In the General Dividend-Valuation Model, the Price of a Share