- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Valuation
- Learning Module 23. Discounted Dividend Valuation
- Subject 7. Multistage Dividend Discount Models
CFA Practice Question
A company is in the transition phase. Its growth rate is high but is expected to decline linearly throughout the supernormal growth period until it reaches a normal rate at the end. The ______ is appropriate to value this company.
B. Three-stage DDM.
C. H model.
A. Spreadsheet modeling.
B. Three-stage DDM.
C. H model.
Correct Answer: C
This company is expected to show growth rate pattern as assumed by H model.
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