QUESTION 15 Which of the following statements is CORRECT? O a. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. O b. The constant growth model cannot be used for a zero growth stock, wherein the dividend is expected to remain constant over time. c. The stock valuation model, Po = D/(rs - g), can be used to value firms whose dividends are expected to decline at a constant rate, i.e., to grow at a negative rate. d. If a stock has a required rate of return rs = 12% and its dividend is expected to grow at a constant rate of 5%, then the stock's dividend yield is also 5%. e. The constant growth model is often appropriate for evaluating start-up companies that do not have a stable history of growth but are expected to reach stable growth within the next few years.

Which of the following statements is CORRECT? a. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. b. The constant growth model cannot be used for a zero growth stock, wherein the dividend is expected to remain constant over time. c. The stock valuation model, P0=D1/(f5g), can be used to value firms whose dividends are expected to decline at a constant rate, i.e, to grow at a negative rate. d. If a stock has a required rate of retum r312% and its dividend is expocted to grow at a constant rate of 5%, then the stock's dividend yield is also 5%. e. The constant growth model is offen appropriate for evaluating start-up companies that do not have a stable history of growth but are expected to reach stable growth within the nest few years