Using the constant dividend growth model to value a stock assumes which of the following? Question 10 options: The dividend will grow at a constant rate forever The required rate of return will never vary from the current rate The dividend will remain the same throughout the life of the company The growth rate is greater than the required return 10. Both a & b are correct statements Save Previous PageNext Page

9. Assume that a constant growth stock is currently selling at its equilibrium price of $52.50 per share. All else constant, if the required rate of return of the stock decreases, the price of the stock will:

Question 9 options:

	increase
	decrease
	remain unchanged
	either increase or decrease depending on the dividend paid in year 0.
	either increase or decrease depending on the stock's required rate of return.

If you use the constant dividend growth model to value a stock, which of the following is certain to cause you to DECREASE your estimate of the current value of the stock?

Question 15 options:

	Decreasing the required rate of return for the stock.
	Decreasing the estimate of the amount of next year's dividend.
	Increasing the firm's long run earnings growth rate.
	Decreasing the rate of inflation in the economy.
	none of the above 15.