Which of the following statements is correct? a. The dividened growth model take

Question

Which of the following statements is correct?

a. The dividened growth model takes into consideration the capital gains earned on a stock.

b. Assume that the required return on a given stock is 13%. If the stocks's dividended is growing at a constant rate of 5%, its expected dividened yield is 5% as well.

c. A stock's dividened yield can never exceed its expected growth rate.

d. A required condition for us to use the dividened growth model is that a stock's expected growth rate exceeds its required rate of return.

e. The price of a stock is the present value of all expected future dividends, discounted at the dividended growth rate

Explanation / Answer

Option B is correct answer.

The price of a stock is the present value of all expected future dividends, discounted at the dividended growth rate.

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