medium · Principles of Finance

Which of the following describes the 'H-model' in the context of dividend discount modeling?

1. It is a model specifically used to value holding companies by discounting subsidiary cash flows.
2. It calculates value by using the harmonic mean of the high and low growth rates.
3. It assumes the growth rate declines linearly from a high initial rate to a stable terminal rate.
4. It is a two-stage model where the terminal growth rate is always exactly half of the initial growth rate.

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