State under what conditions/assumptions the following statements are true (state only one important condition/assumption for each): Gordon's Dividend Growth Model provides a good estimate of intrinsic value of a share.
CS Professional · Valuations & Business Modelling · PYQS · June 2019
State under what conditions/assumptions the following statements are true (state only one important condition/assumption for each): Gordon's Dividend Growth Model provides a good estimate of intrinsic value of a share.
Answer & Explanation:
Gordon's Dividend Growth Model provides a good estimate of intrinsic value of a share, for a company having constant dividend pay-out ratio, return on the equity remains constant, cost of equity does not change with time and market is efficient.
Topics: Valuation Models
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