Present value of all expected future dividends

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The cash flows associated with common stock are more difficult to estimate than those related to bonds because stock has a residual claim against the company versus a contractual obligation for a bond

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The price of a stock is the present value of all expected future dividends l, discounted at the dividend growth rate

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The constant growth model cannot be used for a zero growth stock , where the dividends is expected to remain constant over time

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- false

Reference no: EM131332133

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