1. Which of the following statements is CORRECT? a. The constant growth model ta
ID: 2675615 • Letter: 1
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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