When valuing a stock using the constant-growth model, d1 represents the?

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Business

Emiliano Herring

17 April, 02:35

When valuing a stock using the constant-growth model, d1 represents the?

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Akira Moody · Answer 1

When valuing a stock using the constant-growth model, D1 represents the next expected annual dividend. The constant-growth model is formally known as the Gordon Growth Model. This model shows the intrinsic value of stock based on dividends in the future if they are growing at a constant rate. Instrinsic value is the value of something based on anaylsis without accounting for the market value.