The Constant Growth Rate Model of the DDM Implies That

question 43

Multiple Choice

The constant growth rate model of the DDM implies that:

• A)earnings are not relevant to stock prices.
• B)the payout ratio remains fixed.
• C)the stock price grows at the same rate as dividends.
• D)the growth rate in dividends equates to zero (i.e.,dividends remain a "constant" dollar amount over time).

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