The dividend growth model states that the market price of a stock is only affected by the amount of the dividend.
The amount paid by the organization to its shareholders against their investment is known as a dividend. It is a part of the entire profit earned by the organization in a particular period. The board of directors decides the amount of dividend.
Answer and Explanation:
This statement is false.
The dividend growth model determines the fair value price of a share or unit of equity. This model takes the distribution amount of dividend per share, the estimated growth rate of the dividend and the required rate of return under consideration.
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from Finance 101: Principles of FinanceChapter 14 / Lesson 3