DDM can be applied to all firms, even those that don’t pay dividends? I got this from a schweser testbank question. It seems to be a little wrong from what I learned.
you apply ddm to a company that doesn’t pay dividends and you get 0… what was the whole question?
not to firms that pay unstabe or non-existent divs; also not appropriate from a control perspective
No The firm has to have a history or paying dividends and there needs to be a relationship between dividendsg and profitability. It’s good for mature firms and those in which you have a minority holding
maybe the questionbank was wrong.
The questionbank said that you can use DDM because you can forecast dividends.
If it’s never paid a dividend before you’d struggle to do that though… seems like a comedy question. I’d pick (d) monkey with a gun…