About DDM, which statement is NOT CORRECT? O The stock price computed by DDM is ex-dividend price, meaning the price after the current dividend is paid out. O The risk-adjusted discount rate in DDM can be used as cost of equity. O DDM cannot explain the following fact: stocks that don't pay dividend, such as, Amazon, Google, Facebook, etc., still have huge value. O By Dividend Discount Model (DDM), if a company is expected to never ever pays any cash in the future, its stock should be worth zero.
About DDM, which statement is NOT CORRECT? O The stock price computed by DDM is ex-dividend price, meaning the price after the current dividend is paid out. O The risk-adjusted discount rate in DDM can be used as cost of equity. O DDM cannot explain the following fact: stocks that don't pay dividend, such as, Amazon, Google, Facebook, etc., still have huge value. O By Dividend Discount Model (DDM), if a company is expected to never ever pays any cash in the future, its stock should be worth zero.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Part 1
About DDM, which statement is NOT CORRECT?
O The stock price computed by DDM is ex-dividend price, meaning the price
after the current dividend is paid out.
Attempt 2/2 for
O The risk-adjusted discount rate in DDM can be used as cost of equity.
ODDM cannot explain the following fact: stocks that don't pay dividend, such
as, Amazon, Google, Facebook, etc., still have huge value.
O By Dividend Discount Model (DDM), if a company is expected to never ever
pays any cash in the future, its stock should be worth zero.
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