Using the Constant Growth Model,an Increase in the Required Rate

question 6

Multiple Choice

Using the constant growth model,an increase in the required rate of return from 14 to 15 percent combined with an increase in the growth rate from 6 to 7 percent would cause the price to

• A) Rise more than 1%
• B) Rise less than 1%.
• C) Remain constant.
• D) Fall more than 1%.
• E) Fall less than 1%.

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