In the Constant Growth Dividend Valuation Model, the Required Rate

question 46

Multiple Choice

In the constant growth dividend valuation model, the required rate of return must be ____ the dividend growth rate in order for the formula price to be meaningful.

• A) less than
• B) equal to
• C) greater than
• D) proportional to

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Definitions:

Student Loan

A loan offered to students which is used to pay off educational expenses and is repayable after graduation, typically with interest.

Withdraw

To remove funds from a bank account or investment, or to retract from participation in an activity or agreement.

Compounds Interest

Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.