99. Which of the following is least likely to be an assumption of the Gordon growth model?

- Option : B
- Explanation : Required rate of return is assumed to be constant in the Gordon growth model and thus is not expected to change.

- Option : A
- Explanation : The firm’s fundamental leading P/E Ratio is given by: Expected dividend payout ratio Required rate - growth rate of dividends Expected dividend payout ratio may be calculated by: 1– retention ratio. Therefore, the only bit of information needed for computation is expected constant growth rate of dividends.

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