💼 Pre-MBA Exam Prep

The dividend discount model values a stock based on:

A Book value
B The present value of all expected future dividend payments
C Revenue growth only
D Market capitalization

✓ Correct Answer: Option B

DDM: Stock Price = D1 / (r - g) (Gordon Growth Model for constant growth). Values stock as PV of all future dividends. Requires stable dividend policy and growth rate < required return.

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