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Constant (Gordon) Growth Model Challenges or Weaknesses

CORPFN-DSYZY5

Which of the following is/are challenges or weaknesses with the Constant (Gordon) Growth Model? Select ALL that apply.

A

The Constant (Gordon) Growth Model assumes that there is a steady and perpetual (ongoing) growth rate, which may not be reasonable.

B

The Constant (Gordon) Growth Model can be used for any and every stock, even when constant growth is not assumed.

C

The Constant (Gordon) Growth Model cannot adequately value growth stocks without additional assumptions, as they often do not pay dividends.

D

The Constant (Gordon) Growth Model is extraordinarily sensitive to the growth rate chosen, therefore a minor deviation of the growth rate skews the model.