Question
Which statement is FALSE? Higher the discount rate, lower the stock value in stock valuation models. Constant growth model in dividend discount models cannot be
Which statement is FALSE? Higher the discount rate, lower the stock value in stock valuation models. Constant growth model in dividend discount models cannot be applied for firms that pay irregular dividends. For firms that do not pay dividends at all, residual income model should be applied to find the stock value. Clean surplus relationship (CSR) assumes that change in book value per share is equal to earnings per share minus dividends per share. In two-stage growth dividend discount model, second growth rate (g2) must be greater than the required rate of return (k).
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