Which of the following statements is most correct?
A) The constant growth model takes into consideration the capital gains earned on a stock.
B) It is appropriate to use the constant growth model to estimate stock value even if the growth rate never becomes constant.
C) Two firms with the same dividend and growth rate must also have the same stock price.
D) Statements a and c are correct.
E) All of the statements above are correct.

Question

Quizplus · Accepted Answer

The constant growth model takes into consideration the capital gains earned on a stock, as it assumes that the stock's value will continue to grow at a constant rate indefinitely.

Which of the Following Statements Is Most Correct