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

question 86

Multiple Choice

Using the constant growth model,an increase in the required rate of return from 14 to 18 percent combined with an increase in the growth rate from 8 to 12 percent would cause the price to

• A) Fall more than 4%
• B) Fall less than 4%.
• C) Rise more than 4%
• D) Rise less than 4%.
• E) Remain constant.

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