Which of the following statements is true about the constant growth model? A- the constant growth model can be used if a stock's expected constant growth rate is more than its required return
B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return

The constant growth model can be used if a stock's expected constant growth rate is less than its required return.

Explanation:

The Constant Growth Model  is a stock valuation method.

It assumes that a company's dividends are increasing at a constant growth rate indefinitely.

Formula: Current price =  (Next dividend the company is to pay) ÷ (required rate of return for the company - expected growth rate in the dividend.

When expected constant < required return, then the constant growth model can be used.

Hence, the statement is true about the constant growth model :

The constant growth model can be used if a stock's expected constant growth rate is less than its required return.

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