- 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 two-stage DDM is called the H-model when
A. There is a constant growth rate in each stage, such as 16% in stage 1 and 6% in stage 2.
B. There is a linearly declining dividend growth rate in stage 1 followed by a fixed growth rate is stage 2.
C. These two concepts (two stage DDM and the H-model) are totally different and have no direct relationship.
Explanation: It is the growth rate pattern assumed by the H model.
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