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Basic Question 2 of 7

According to the dividend discount model the value of a stock is

A. The present value of an expected stream of future dividends.
B. The future value of an expected stream of future dividends.
C. The sum of all future dividends.
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User Contributed Comments 4

User Comment
chamad I don't see the difference between A & C! can someone explain...thanks
VenkatB The sum of all (Present Value of) future dividends

C is missing the "present value" aspect
Oarona well explained VenkatB
johntan1979 Just recall the formula:

Is V = sum of all future dividends, i.e. D1, D2, D3...?

Nope, it's D/r-g
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Craig Baugh

Craig Baugh

Learning Outcome Statements

calculate and interpret the value of a common stock using the dividend discount model (DDM) for single and multiple holding periods;

CFA® 2025 Level II Curriculum, Volume 3, Module 21.