Which of the Following Increases the Price an Investor Is

question 22

Multiple Choice

Which of the following increases the price an investor is willing to pay for a stock?

• A) The investor increases his estimate of the constant growth rate for dividends.
• B) The investor decreases his estimate of the constant growth rate for dividends.
• C) The investor increases his estimate of the required rate of return.
• D) The investor assumes a higher beta for the stock.

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Definitions:

Profit Margin

A financial metric indicating the percentage of revenue that remains as profit after all expenses are subtracted from sales.

Inventory Turnover

A ratio indicating how often a company's inventory is sold and replaced over a period, highlighting efficiency in managing stock and sales.

Grocery Store

A grocery store is a retail establishment that specializes in selling food and other household goods.

Accounts Receivable Turnover

A financial ratio that measures how many times a company collects its average accounts receivable in a period.