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The required rate of return for common stock is K e = ( D 1 P 0 ) + g . What are the assumptions

The required rate of return for common stock is

K_{e} = (\frac{D_{1}}{P_{0}}) + g .

What are the assumptions of the model?

Multiple Choice

Growth

(g)

is constant to infinity.

The price earnings ratio stays the same.

The firm must pay a dividend to use this model.

All of these options are assumptions of the model.

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