Homework Answers
Gordon model consider the future dividends payment by a company with its growth rate and calculates the value of stock calculating the present value of the dividend payments
Hence gordon model is not applicable for conpany with 100% retention as there will be no dividend payment. Hence first option is incorrect
Since the model consider only dividend payment with constant growth it ignores all other risks. Hence second option is correct
Gordon model factors dividend growth rate hence it is sensitive to growth rate. Hence the option is wrong
Gordon model assumes the growth rate to be constant, hence the company growing with GDP growth rate will have varying growth rates. Hence last option is not correct
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