Which of the following statements is correct?
◦
It is appropriate to use the constant growth model to estimate stock value even if the dividend yield is never expected to become constant.
◦
If a stock has a required rate of return rs = 14% and if its dividend is expected to grow at a constant rate of 8%, this implies that the stock’s dividend yield is also 8%.
◦
The constant growth model takes into consideration the capital gains investors expect to earn on a stock.
◦
The price of a stock is the present value of all expected future dividends, discounted at the required rate of return plus dividend growth rate.