The dividend discount model is based on the idea that the value of any security is the
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Question:
The dividend discount model is based on the idea that the value of any security is the present value of the security's expected future cash flows as discounted at a rate of return demanded by the holders of that security. Therefore, the value of common equity in the dividend discount model is equal to the present value of the:
expected common dividend stream during the holding period
expected common dividend stream during the holding period plus the present value of the future stock price
expected common dividend stream during the holding period plus the future value of the current stock price
discounted cost of equity for the security
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