The dividend model requires that a firm has a cash dividend history and that the dividend history shows a ________
A) constant dividend or a constant growth in price where constant growth can be either positive or negative
B) positive dividend or a negative growth in dividends
C) constant dividend or a positive growth in dividends
D) constant price or a positive growth in dividends
Answer: C
Explanation: C) The dividend model requires that a firm has a cash dividend history and that the dividend history shows a constant dividend or a positive growth in dividends. The requirements of a constant dividend and positive growth are essential in deriving the Dividend Growth Model.
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