Explain how you reached the answer or show your work if a mathematical calculati

Question

Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. 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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