Question

in constant growth model why growth (g) is dividend in the denominator . Explain the significance of growth is dividend discount model .​

Answer 1

Answer:

The Gordon Growth Model (GGM) is used to

determine the intrinsic value of a stock

based on a future series of dividends that

grow at a constant rate. It is a popular and

straightforward variant of the dividend

discount model (DDM). The GGM assumes

that dividends grow at a constant rate in

perpetuity and solves for the present value

of the infinite series of future dividends.