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What is the model called that determines the present value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate?a. zero growthb. dividend growthc. capital pricingd. earnings capitalizatione. discount dividend

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Answer:

The correct answer is letter "B": dividend growth.

Step-by-step explanation:

A dividend is a cash distributed by a company to its shareholders. The dividend growth is the rate that measures the increase in a dividend given a certain period, typically calculated in the term of one year. The dividend growth is also considered a gauge that may predict the future continuation of the behavior of profits within a company. In that sense, it can influence the current price of a stock and the discount rate as well.

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