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Basic Question 8 of 12
The Gordon growth model would typically be most appropriate in valuing the stock of a:
B. rapidly growing company.
C. moderate growth, 'mature' company.
A. new venture expected to retain all earnings for several years.
B. rapidly growing company.
C. moderate growth, 'mature' company.
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Learning Outcome Statements
calculate the value of a common stock using the Gordon growth model and explain the model's underlying assumptions;
calculate the value of non-callable fixed-rate perpetual preferred stock;
calculate and interpret the implied growth rate of dividends using the Gordon growth model and current stock price;
describe strengths and limitations of the Gordon growth model and justify its selection to value a company's common shares;
CFA® 2025 Level II Curriculum, Volume 3, Module 21.