1. Which of the following statements is CORRECT? a.The constant growth model tak
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Question
1. Which of the following statements is CORRECT?a.The constant growth model takes into consideration the capital gains investors expect to earn on a stock. b.Two firms with the same expected dividend and growth rates must also have the same stock price.
c.It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant.
d.If a stock has a required rate of return rs = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock
Explanation / Answer
a.The constant growth model takes into consideration the capital gains investors expect to earn on a stock.
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