Which of the following statements best describes how a change in a firm's stock price would affect a stock's capital gains yield?

The capital gains yield on a stock that the investor already owns has a direct relationship with the firm's expected future stock price.

The capital gains yield on a stock that the investor already owns has an inverse relationship with the firm's expected future stock price.

Walter Utilities is a dividend$-$paying company and is expected to pay an annual dividend of $$1\mathrm{.}25$ at the end of the year. Its dividend is expected to

grow at a constant rate of $6\mathrm{.}00\%$ per year. If Walter's stock currently trades for $$16\mathrm{.}00$ per share, what is the expected rate of return?

$13\mathrm{.}81\%$

$654\mathrm{.}69\%$

$1,021\mathrm{.}25\%$

$607\mathrm{.}37\%$

Which of the following conditions must hold true for the constant growth valuation formula to be useful and give meaningful results?

The required rate of return, $r_s,$ must be greater than the long$-$run growth rate.

The company's stock cannot be a zero growth stock.

The company's growth rate needs to change as the company matures.