The Constant-Growth Valuation Model Is Based on the Premise That

question 50

Multiple Choice

The constant-growth valuation model is based on the premise that the value of a share of common stock is ________.

• A) the sum of the dividends and expected capital appreciation
• B) determined based on an industry standard P/E multiple
• C) determined by using a measure of relative risk called correlation coefficient
• D) equal to the present value of all expected future dividends

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Definitions:

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