All of the following are regarded as disadvantages when using the dividend growth model to estimate the cost of ordinary shares (equity), except:

Question

All  of  the  following  are  regarded  as  disadvantages  when  using  the  dividend  growth model to estimate the cost of ordinary shares (equity), except:

Answer

it has the assumption that dividends grow at a constant rate.

Answer

the cost of ordinary shares (equity) is sensitive to the estimated growth rate (g).

Answer

the approach does not consider risk explicitly.

Answer

it is only applicable to companies paying dividends.

Answer

the market risk premium must be estimated.

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All of the following are regarded as disadvantages when using the div...

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