A dividend discount model derives share value from what?
ALast traded market price
BReplacement cost of assets
CDiscounted future dividends
DNet asset value per share
Answer & Solution
Correct answer: C. Discounted future dividends
The model sums the expected dividend payments to shareholders and discounts each back to its present value.
Keep practising Dividend Discount Model
Browse all Dividend Discount Model questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
What equity premium did a standard calibrated general equilibrium model predict?Who named the equity premium puzzle in their 1985 study?The equity premium puzzle starts from an observed US premium of roughly what size?How is the equity risk premium defined?As a firm's risk rises, what happens to its cost of capital?Bond yield plus risk premium adds a premium to which rate?A firm's combined cost of debt and equity capital is calculated as what?Why is a firm's cost of equity harder to find than its cost of debt?