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Which of the following is a limitation of the​ dividend-discount model? A. Its reliance on dividend forecasts. B. It does not consider past earnings and performance. C. It requires that the growth rate always be higher than the required rate of​ return, which is not realistic. D. It cannot handle negative growth rates.

Respuesta :

Answer:

The answer to this questions is D.  It cannot handle negative growth rates.

Explanation:

The Dividend Discount Model  is a quantitative method of valuing a company’s stock price based on the assumption that the current fair price of a stock equals the sum of all of the company’s future dividends discounted back to their present value.

one major limitations of Dividend discount model is that It cannot handle negative growth rates.

Hence the answer is D

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