Question
According to the constant dividend growth model (or Gordon model), which of the following statement is incorrect? A) Assume that the required rate of return
According to the constant dividend growth model (or Gordon model), which of the following statement is incorrect? A) Assume that the required rate of return on a given stock is 13 percent. If the stocks dividend is growing at a constant rate of 5 percent, its expected dividend yield is 8 percent. B) A stocks expected dividend yield must equal the expected growth rate. C) The expected dividend yield on a stock is equal to the required rate of return less the expected capital gains yield. D) A stocks expected capital gains yield can be greater than the expected dividend yield.
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