In the constant growth dividend model for determining the required return on equity,the expected returns are determined by the expected dividend yield as well as the expected growth in dividends over time.

Question

Quizplus · Accepted Answer

The constant growth dividend model takes both the expected dividend yield and the expected growth in dividends into account when calculating the required return on equity. This is because the expected return on equity is determined by the sum of the dividend yield and the expected growth rate, divided by the current stock price.

In the Constant Growth Dividend Model for Determining the Required