The constant growth valuation formula has dividends in the numerator. Dividends are divided by the difference between the required return and dividend growth rate as follows: P_0 = D_1/(r_s - g) Which of the following statements best describes how a charge in a firm's stock price would affect a stock's capital gains yield? The capital gains yield on a stock that the investor already owns has an inverse relationship with the firm's expected future stock price. The capital gains yield on a stock that the investor already owns has a direct relationship with the firm's expected future stock price. Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $0.85 at the end of the year. Its dividend is expected to grow at a constant rate of 7.50% per year. If Walter's stock currently trades for $23.00 per share, what is the expected rate of return? 7.81% 7.53% 6.70% 11.20% Which of the following conditions must hold true for the constant growth valuation formula to be useful and give meaningful results? The company's stock cannot be a zero growth stock. The required rate of return, r_s, must be greater than the long-run growth rate. The company's growth rate needs to change as the company matures.