The Constant Growth Model Is an Approach to Dividend Valuation

question 124

True/False

The constant growth model is an approach to dividend valuation that assumes a constant future dividend.

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Definitions:

Security Returns

The gains or losses from investing in a financial security, calculated based on the change in investment value and any income from the investment, like dividends.

Systematic Factors

Factors that affect the entire market or a large segment of the market, such as economic, political, or social changes.

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period, eroding purchasing power.

Lintner

Lintner refers to John Lintner, an economist known for his work on the dividend policy of firms and contributions to the capital asset pricing model (CAPM).