Which of the Following Statements Concerning the Constant-Growth Dividend Valuation

question 10

Multiple Choice

Which of the following statements concerning the constant-growth dividend valuation model is (are) correct?
I. One simple method of estimating the dividend growth rate is to analyze the historical pattern of dividends.
II. The expected total return equals the return from capital gains plus the return from dividends paid.
III. The model is applicable to growth firms with initially high growth rates.
IV. The intrinsic value calculated using this method can change from one investor to another if their risk assessments, and therefore their required returns, differ.

• A) I and IV only
• B) II and III only
• C) I, II and IV only
• D) I, II and III only