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50. The Constant Dividend Model for calculating the intrinsic value of a stock is Io =D1/(k-g)...

50. The Constant Dividend Model for calculating the intrinsic value of a stock is Io =D1/(k-g) where K is the expected return of the market and g is growth rate of the company. The growth rate (g) of the company can be calculated by using the Capital Asset Pricing Model.

a. True.

b. False.

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Answer #1

False.

The Constant Dividend Model for calculating the intrinsic value of a stock is Io =D1/(k-g) where K is the expected return of the market and g is growth rate of the company. The growth rate (g) of the company cannot be calculated by using the Capital Asset Pricing Model.

Using CAPM can be used to calculate K.

So the statement is False.

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