The dividend growth model assumes that:

Question 4 options:

1)

The rate of growth is constant.

2)

Next year's dividend is the same amount as last year's dividend.

3)

The rate of growth exceeds the required rate of return.

4)

The dividend amount used in the formula is the last dividend paid.

5)

The valuation is as of the year following the payment of the dividend used in the computation.