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Basic Question 1 of 6
According to the dividend discount model the value of a stock is the ______.
B. future value of an expected stream of future dividends.
C. sum of all future dividends.
A. present value of an expected stream of future dividends.
B. future value of an expected stream of future dividends.
C. sum of all future dividends.
User Contributed Comments 4
| User | Comment |
|---|---|
| chamad | I don't see the difference between A & C! can someone explain...thanks |
| VenkatB | The sum of all (Present Value of) future dividends C is missing the "present value" aspect |
| Oarona | well explained VenkatB |
| johntan1979 | Just recall the formula: Is V = sum of all future dividends, i.e. D1, D2, D3...? Nope, it's D/r-g |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
calculate and interpret the present value(PV) of fixed-income and equity instruments based on expected future cash flows
calculate and interpret the implied return of fixed-income instruments and required return and implied growth of equity instruments given the present value (PV) and cash flows
CFA® 2025 Level I Curriculum, Volume 1, Module 2.