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What is the relationship between the growth rate and the cost of equity implied in the

dividend-discount model?

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Final answer:

The growth rate and the cost of equity in the dividend-discount model are positively related: as the growth rate increases, the cost of equity also increases.

Step-by-step explanation:

The relationship between the growth rate and the cost of equity implied in the dividend-discount model is that as the growth rate increases, the cost of equity also increases. This is because a higher growth rate implies higher future dividends, which in turn increases the expectations of investors and leads to a higher cost of equity. On the other hand, a lower growth rate is associated with lower future dividends and lower expectations, resulting in a lower cost of equity.

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