L4: Stock Valuation Flashcards
1
Q
What is the Gordon Growth Model?
A
- When the value of a constant growth stock is the PV of a growing perpetuity
P0=D1/(r-g)
We assume that the first dividend is paid one year from now.
2
Q
A
What is the Gordon Growth Model?
P0=D1/(r-g)
We assume that the first dividend is paid one year from now.