Which of the following are assumptions of the dividend discount model?
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A. B. C. D.A
The infinite period Dividend Discount Model has the following assumptions:
1. Dividends grow at a constant rate
2. The constant growth rate will continue for an infinite period
3. The required rate of return (k) is greater than the infinite growth rate (g). If it is not, the model gives meaningless results because the denominator becomes negative.