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Dividend growth model – assumptions

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Dividend growth model – assumptions

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by AvatarJohn Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 7, 2022 at 8:45 am #657668
    Avatarjustalittlelost
    Participant
    • Topics: 30
    • Replies: 44
    • ☆☆

    Hey John,
    Could you please explain why ” investors make rational decisions” is an assumption of DGM?
    Thank you!

    June 7, 2022 at 3:08 pm #657706
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    The dividend growth model assumes that the market value determined by the shareholders is based on sensible expectations as to the future dividends. In practice lots of other factors may affect the price they are prepared to pay for shares.

    June 9, 2022 at 7:42 am #658029
    Avatarjustalittlelost
    Participant
    • Topics: 30
    • Replies: 44
    • ☆☆

    Okay got it. Thank you !!

    June 9, 2022 at 8:40 am #658053
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    You are welcome.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Dividend growth model – assumptions’ is closed to new replies.

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