5. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numerator: Dividends are divided by the difference between the required return and dividend growth rate as follows: 16-0 Which of the following statements is true? Increasing dividends may not always increase the stock price, because less earrings may be invested back into the firm and that impedes growth. O Increasing dividends will always decrease the stock price, because the firm is depleting internal funding resources Increasing dividends will always increase the stock price. Walter Utilities is a dividend-paving company and is expected to pay an annual dividend of $1.05 at the end of the year. Its dividend is expected to grow at a constant rate of 9.50% per year. If Walter's stock currently trades for $19.00 per share, what is the expected rate of return? O 15.03% 89.300 O 10.00% -9.55% What do you expect to happen to Walter's expected dividend vield Walter's dividend is expected to grow at a constant griwth rate of t in the future? It will stay the same. It will decrease will increase