Knowee
Questions
Features
Study Tools

A model for estimating intrinsic price which uses the dividends of a companya.Discounted Dividend Modelb.Equity-based modelc.Corporate Modeld.Asset-based model

Question

A model for estimating intrinsic price which uses the dividends of a company

a. Discounted Dividend Model
b. Equity-based model
c. Corporate Model
d. Asset-based model

🧐 Not the exact question you are looking for?Go ask a question

Solution

The model for estimating intrinsic price which uses the dividends of a company is the Discounted Dividend Model. This model estimates the value of a stock by summing the present value of its future dividends. Here's a step-by-step explanation:

  1. Identify the dividends: The first step in this model is to identify the dividends that the company is expected to pay in the future. This can be done by looking at the company's history of dividend payments and its stated dividend policy.

  2. Discount the dividends: The next step is to calculate the present value of these future dividends. This is done by discounting the dividends back to the present using a discount rate. The discount rate is typically the required rate of return for the investor.

  3. Sum the discounted dividends: The final step is to sum up all of these discounted dividends. This gives the estimated intrinsic value of the stock.

So, the answer to your question is a. Discounted Dividend Model.

This problem has been solved

Similar Questions

An investor is keen to know a stock`s intrinsic value rather than its stock price or market price.Select one:TrueFalse

Group of answer choicesearnings per share minus dividends per share.net income determined using generally accepted accounting principles.dividendscash flows.

Dividends paid: Group of answer choices increase assets. increase expenses. decrease revenues. decrease retained earnings.

The stated value of one share of stock is known as itsMultiple Choicedividend yield.capital in excess of par value.market value.par value.prime rate.

Paying out an extra dividend during financial distress is an example of shareholders " the property."

1/1

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.