How helpful is the Dividend Discount Model in understanding the stock market? What are some of its limitations?

Xiaoning Zhao

doi:10.54691/bcpbm.v35i.3370

Authors

Xiaoning Zhao

DOI:

https://doi.org/10.54691/bcpbm.v35i.3370

Keywords:

dividend discount model; stock valuation; investment.

Abstract

The background of this article is under an era where more and more people start learning how to manage their wealth in order to generate more gains, such as investing in stocks. The purpose of this article is to provide the audience a classical model called Dividend Discount Model, which could help them value their stocks and thus make smarter investment decisions. However, this model is not perfectly workable due to the complexity of real-world financial markets. Therefore, this article would critically evaluate the effectiveness of this model and provide a more flexible model as a reference for the audience to make investment.

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References

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