Schweser - LOS 40.i says that GGM (gordon growth model) can be applied to indices easily. Can someone please explain how?
Because the dividends from the stocks listed in the index is the dividend you are receiving from investing in the index. In other words, the index can also be regarded as the price of a portfolio that contains these 30 stocks. http://www2.bc.edu/~irelandp/ec261/chapter7.pdf
as above, but also as it is the market, there aren’t any 2 or 3 stage growth periods etc, rather a constant growth (on average).
Thank you!