An Increase in a Firm's Expected Growth Rate Would Cause

question 78

Multiple Choice

An increase in a firm's expected growth rate would cause its required rate of return to

• A) increase.
• B) decrease.
• C) fluctuate less than before.
• D) fluctuate more than before.
• E) possibly increase,possibly decrease,or possibly remain constant.

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Definitions:

Coupon Rate

The interest rate a bond pays each year, shown as a percentage of its face value.

Yield To Maturity

The total return expected on a bond if it is held until the date it matures, including both interest payments and the difference between the bond's current market price and its face value.

Semi-Annually

Occurring or calculated twice a year, typically every six months.

Face Value

The nominal or original value stated on a financial instrument, such as a bond or stock certificate, not necessarily its current market value.