Which of the following statements is correct?
A) The constant growth model takes into consideration the capital gains investors expect to earn on a stock.
B) Two firms with the same expected dividend and growth rate must also have the same stock price.
C) It is appropriate to use the constant growth model to estimate stock value even if the growth rate is never expected to become constant.
D) The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.
Correct Answer:
Verified
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