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With respect to the information which I got from EMH especially weak form, can I conclude that DVM “when valuing shares” is an example of it, because the growth rate is focusing past information.
Not really.
The growth rate that we use in the formula should be the growth rate that shareholders are expecting in the future. In real life many factors could influence the growth rate they expect (depending on the information that they have).
In the exam we are either given a growth rate, or if not, then we are only expected to use the past growth rate, or to use the rb model (Gordon’s growth).
If shareholders in real life were to use simply the past growth, then I would agree with you. But it is not the dividend formula itself that is the cause.
I hope that makes sense 🙂
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