Which of these completes this statement to make it true? The constant growth model is
A) always going to have assumptions that will hold true.
B) able to be adjusted for stocks that don't expect constant growth without sizeable errors.
C) only going to be appropriate for the limited number of stocks that just happen to expect constant growth.
D) only going to be appropriate for the limited number of stocks that just happen to expect nonconstant growth.

Question

Quizplus · Accepted Answer

The constant growth model is only appropriate for the limited number of stocks that just happen to expect constant growth. This model assumes that the stock will grow at a constant rate forever, which is not a realistic assumption for most stocks. Therefore, this model should only be used for stocks that meet this specific criterion.

Which of These Completes This Statement to Make It True