Question: If the model below is to give a reasonable valuation of a stock, which of the following is not a valid assumption for the model?
If the model below is to give a "reasonable" valuation of a stock, which of the following is not a valid assumption for the model? P_0 = D_0(1 + g)/r_c - g a. Growth, g, is negative. b. There will be no growth, i.e., g is zero c. The growth rate exceeds the required rate of return. d. The required return is exceptional high (r_s > 30%). e. All of the above are workable assumptions and are valid in the sense that the model can be used even if they hold true
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