The Constant Dividend Growth Model

Multiple Choice

The constant dividend growth model:
I.assumes that dividends increase at a constant rate forever.
II.can be used to compute a share price at any point of time.
III.states that the market price of a share is only affected by the amount of the dividend.
IV.considers capital gains but ignores the dividend yield.

A) I only.
B) II only.
C) III and IV only.
D) I and II only.
E) I, II, and III only.