To be used appropriately, the constant growth dividend discount model requires: A company's cost of common equity capital be larger than its dividend growth rate The company be mature with a growth rate that is approximately equal to, or less than, the growth rate of the overall economy The company's growth rate remains approximately the same forever Group of answer choices All of the above Statements 1 and 2 only Statement 2 only Statements 2 and 3 are correct

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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45. To be used appropriately, the constant growth dividend discount model requires:

  1. A company's cost of common equity capital be larger than its dividend growth rate
  2. The company be mature with a growth rate that is approximately equal to, or less than, the growth rate of the overall economy
  3. The company's growth rate remains approximately the same forever
Group of answer choices
All of the above
Statements 1 and 2 only
Statement 2 only
Statements 2 and 3 are correct
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