Gordon or constant growth dividend discount

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Reference no: EM131056201

If the constant growth ("Gordon" or "Constant Growth Dividend Discount") model is to give a reasonablea valuation of a stock, which of the following is not a valid assumption for the model?

A. Growth, g, is negative.

B. There will be no growth, i.e., growth is zero.

C. The growth rate exceeds the required rate of return. The required return is exceptionally high (e.g., KS > 30%)

D. All of these are workable assumptions and are valid in the sense that the model can be used even if they hold true.

Reference no: EM131056201

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