Glossary of economics research
Results of search for Gordon model follow:
Gordon model:
Of a stock price. From M. R. Gordon (1962). This model is sometimes used as
a baseline for comparison or for intuition.
Assume a constant rate of return r, and a constant dividend growth rate g.
Define Pt to be the price of the stock in period t, and
Dt to be its dividend in period t. Implication is that price of
stock Pt = Dt/(r-g).
Source: Bollerslev-Hodrick 1992; Gordon 1962 ref'd directly there
Contexts: finance
Back to top