Which one of the following statements concerning the dividend growth model is correct?
A) One of the advantages is that it applies to all dividend paying stocks.
B) The estimated cost of equity financing is very dependent upon the assumed rate of growth.
C) The estimated cost of equity will be directly affected by changes in the risk-free rate of return.
D) The risk level of the use of the funds will be directly considered by the model.
E) The main problem with the model is that it is so simplistic.
Correct Answer:
Verified
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