alleryStart learning →How can a share with no dividend be valued in a dividend model?
AUse earnings instead of dividends
BDeclare its value as zero
CTreat it as a perpetual bond
DUse only the coupon rate
Answer & Solution
Correct answer: A. Use earnings instead of dividends
If dividend irrelevance is assumed, earnings per share can replace the dividend in a more general version of the model.
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