n NISM Certifications
XXI NISM Series XXI-A
Medium

The "Growth Rate" in the Dividend Discount Model is:

Practice question from NISM XXI A for PMS - Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. The rate at which dividends are expected to grow indefinitely

    Correct answer

  2. B

    The current dividend paid by the company

  3. C

    The rate of return required by investors

  4. D

    The rate at which the stock price fluctuates

Why this is the answer

The growth rate (g) is used in the Gordon Growth Model to estimate stock value.

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