Final answer:
The claim that the constant growth model cannot be used for a zero growth stock is false because the model simplifies to a perpetuity formula in the case of zero growth.
Step-by-step explanation:
The statement 'The constant growth model cannot be used for a zero growth stock, where the dividends are expected to remain constant over time' is false. The constant growth model, also known as the Gordon Growth Model, can indeed be used for a zero growth stock scenario. In this case, the growth rate (g) is zero, which simplifies the model to a perpetuity formula where the value of the stock is equal to the dividend (D) divided by the required rate of return (k). The formula for valuing a zero growth stock would thus be P = D/k, demonstrating that the constant growth model accommodates stocks with a growth rate of zero as well.