THE CAPITAL ASSET PRICING MODEL

The capital Asset Pricing Model

The capital Asset Pricing Model

Dividend Growth ModelThe basic assumption in the Dividend Growth Model is that the dividend is expected to grow at a constant rate. That this growth rate will not change for the duration of the evaluated period. As a result, this may skew the resultant for companies that are experiencing rapid growth. The Dividend Growth Model is better suited for those stable companies that fit the model.

In summary, the Dividend Growth Model works well for those companies growing at a rate equal to or lower than that ...