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1. Which of the following two firms should be applied the dividend discount model (DDM) to value its stock price? Explain. Firm XX with constant

1. Which of the following two firms should be applied the dividend discount model (DDM) to value its stock price? Explain.

  • Firm XX with constant annual dividend payment since 10 years ago;
  • Firm YY with constant dividend payout ratio (dividend payment/total earnings) since 10 years ago.

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