Using the constant growth dividend valuation model and assuming dividends will growth a
constant rate forever, the increase in the value of the stock each year should be equal to the
A) dividend yield.
B) required return on the stock, rcs.
C) growth rate in dividends, g.
D) dividend yield plus the capital gains yield.
Question 2
The current yield is greater than the coupon rate for a bond selling above par value.
Indicate whether the statement is true or false