Which of the Following Statements Is Correct

question 39

Multiple Choice

Which of the following statements is correct?

• A)Growth stocks usually have relatively high payout ratio.
• B)The stock valuation model, P₀ = D₁/(r_s - g), can be used for firms that have expected negative, but constant, growth rates.
• C)The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.
• D)The constant growth model cannot be used for a zero growth stock, where the dividend is expected to remain constant over time.

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