Question
Which of the following statements is most correct? a. The constant growth model can be applied to companies that expect zero dividend growth rate. b.
Which of the following statements is most correct?
a. The constant growth model can be applied to companies that expect zero dividend growth rate.
b. The constant growth model is often appropriate for companies that never pay dividend.
c. Two firms with the same dividend and growth rate should have the same stock price.
d. The constant growth model is inappropriate for mature companies with a stable history of growth.
e. The constant growth model is often appropriate for companies that the dividend growth rate is larger than its required rate of return on stock.
(Note: I chose C. but it was incorrect. Can't figure this out)
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