The Constant Growth Model, or Gordon Model, Is Formulated as Follows

Multiple Choice

The constant growth model, or Gordon model, is formulated as follows: $$p _ { 0 } = \frac { D _ { 0 } ( 1 + g ) } { k - g }$$ The model can be recast to focus on the expected return implied by the constant growth assumption, as follows:

A) g = [P₀(k-g) /D₀] - 1.
B) D1 = P₀(k - g) .
C) k_e = D₁/(P₀ - g) .
D) k_e = [D₀(1+g) /P₀]+ g.