6. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numerator. Oividends are divided by the difference between the required return and dividend growth rate as follows: P^0=uiD1 Which of the following statements best describes how a change in a firm's stock price would affect a stock's capital gains yield? The capital gains yield on a stock that the investor aiready owns has a direct relationship with the firm's expected future stock price. The capital gains yield on a stock that the investor already owns has an inverse relationship with the firm's expected future stock price. Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $2.45 at the end of the year. Its dividend is expected to grow at a constant rate of 6.50% per year. If Walter's stock currently trades for $29.00 per share, what is the expected rate of return? 14.95%1,104.83%713.36%657.93% Walter Ueilitien is a dividend-paying company and is expected to pay an annual divideryd of $2.45 at the end of the vear, fts dividend is expected to grow at a constant rate of 6.50% per year. If Walter's stock currently trades for 529.00 per share, what is the expected rate of return? 14,95% 1,104.83% 713.36% 657,938 Which of the following condaions must haid true for the constant proath valuation formula to be useful and give meaninghl fesuits? The required rate of return, fis must be greater than the feng-fun growth fate. The company's growth rate needs to change as the company matures: The company's stock cannot be a zero growth stock