The stock valuation model D1/(Rc - g) requires Rc G.

Name: The stock valuation model D1/(Rc - g) requires Rc > G.
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Question

The stock valuation model D1/(Rc - g) requires Rc > G.

Quizplus · Accepted Answer

This is true because if the required rate of return (Rc) is less than the dividend growth rate (g), the formula would result in a negative or zero value, which does not make sense for stock valuation purposes. Therefore, Rc needs to be greater than g in order for the formula to provide a meaningful result.

The Stock Valuation Model D1/(Rc - G) Requires Rc >