Question: The dividend discount model (DDM) is a quantitative method of valuing a company's stock price. Answer all the following parts of the question. (Total

The dividend discount model (DDM) is a quantitative method of valuing a company's stock price. Answer all the following parts of the question. (Total marks: 24) a. Explain the logic of dividend discount model. (4 marks) b. Describe three limitations of dividend discount model. (6 marks) c. Describe two alternative approaches to dividend discount model. (6 marks) d. Tesla has never declared dividends on its common stock and will probably not pay any cash dividends in the foreseeable future. Critically discuss the reasons why the Tesla stock price rose so rapidly during the course of 2020 without past or future dividend payments. (8 marks) Activate Win

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a The logic of the dividend discount model DDM is based on the principle that the intrinsic value of a stock is the present value of its expected future dividends It assumes that the primary driver of ... View full answer

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