Question

Which of the following statements is FALSE of the dividend-discount ​model?

A. We cannot use the dividend-discount model to value the stock of a firm with rapid or changing growth.
B. The simplest forecast for the​ firm's future dividends states that they will grow at a constant​ rate, i.e., forever.
C. As firms​ mature, their growth slows to rates more typical of established companies.
D. The dividend-discount model values the stock based on a forecast of the future dividends paid to shareholders.

Answer 1

Answer: The following statements is false of the dividend-discount ​model: We cannot use the dividend-discount model to value the stock of a firm with rapid or changing growth.

The model is a technique of evaluating a institution stock price i.e. there on the concept that the organizations stock is equal to the total of all of its dividend payments. It is used to evaluate stocks based on the NPV of the dividends.