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    The Economics of Money Banking Study Set 3
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    Exam 7: The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis
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    Explain the Gordon Growth Model of Stock Pricing
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Explain the Gordon Growth Model of Stock Pricing

Question 43

Question 43

Essay

Explain the Gordon growth model of stock pricing. Explain how changes in each component affect the current stock price. On what assumptions is the model based?

Correct Answer:

verifed

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The basic model is
p₀= blured image
where
P₀ = the ...

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