The dividend growth model equates a stocks intrinsic value (theoretical price) to the discounted sum of the constant growth dividend stream. The relationship between the dividend growth rate (g) and the discount rate (r) is very important. Which statement accurately describes that relationship?

Select one:

a. I When g equals zero percent then the stocks intrinsic value is equal to div/r.

b. II When g exceeds r then the stocks intrinsic value is negative, meaning the stock is worthless

c. III The stocks intrinsic value is a decreasing function of the dividend growth rate (g)

d. II and III are correct

e. I, II, and III are all correct