The Gordon Model or DDM limitation assumes that the company will maintain a constant continuously or up to infinity. The model may help investors determine the stock's fair price in a constant growth industry, such as the retail grocery industry. The growth in the retail grocery industry is the function of the demographics. Generally, companies maintain constant growth if they are involved in delivering essential consumer goods or services, and their growth depends on the change in demographics. If you were an investor, would you use a dividend discount model or discounted cash flow model? Explain why?

Answer rating: 100% (QA)

Step 11 Step 1 The decision of whether to use a dividend discount model DDM or a discounted cash flo... View the full answer