1. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numeratoc. Oividends are divided by the difference between the required return and dividend growth rate as follows: P0=(b0c1)D1 Which of the following statements best describes how a change in a firm's stock price would affect a stock's capital gains yleld? The capital gains yield on a stock that the investor already owns has an inverse rolationship with the firm's expected future stock price. The capital gains yieid on a stock that the investor already owns has a direct relationship with the firm's expected future stock price. Walter Utities is a dividend-paying company and is expected to pay an annual dividend of $1.25 at the end of the year. Its dividend is expected to grow at a constant rate of 6.00% per year. If Waiter's stock currently trades for $16.00 per share, what is the expected rate of retum? 1,021.25% 13.81% 607.37% 654.69% Which of the following conditions must hold true for the constant growth vahation formula to be useful and give meaningrul results? The required rate of return, ri. must be greater than the long-run growth rate. The componyis stock cannot be a rero growth stock The company's growth rate needs to change as the company matures. 1. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numeratoc. Oividends are divided by the difference between the required return and dividend growth rate as follows: P0=(b0c1)D1 Which of the following statements best describes how a change in a firm's stock price would affect a stock's capital gains yleld? The capital gains yield on a stock that the investor already owns has an inverse rolationship with the firm's expected future stock price. The capital gains yieid on a stock that the investor already owns has a direct relationship with the firm's expected future stock price. Walter Utities is a dividend-paying company and is expected to pay an annual dividend of $1.25 at the end of the year. Its dividend is expected to grow at a constant rate of 6.00% per year. If Waiter's stock currently trades for $16.00 per share, what is the expected rate of retum? 1,021.25% 13.81% 607.37% 654.69% Which of the following conditions must hold true for the constant growth vahation formula to be useful and give meaningrul results? The required rate of return, ri. must be greater than the long-run growth rate. The componyis stock cannot be a rero growth stock The company's growth rate needs to change as the company matures