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A stock's dividend is expected to grow at a constant rate of 5 percent a year. Assuming a constant dividend growth model, the following are
A stock's dividend is expected to grow at a constant rate of 5 percent a year. Assuming a constant dividend growth model, the following are possible conclusions to the statement above: 1. The expected return on the stock is 5 percent a year. II. The stock's dividend yield is 5 percent. III. The stock's price one year from now is expected to be 5 percent higher. Which of the following best describes these conclusions? Select one: a. Conclusions I and II are correct. O b. Conclusions I, II and III are correct. O c. Only conclusion III is correct. d. Only conclusion I is correct. O e. Only conclusion II is correct
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