Based on the Dividend Discount Model, an Increase in Which

question 71

Multiple Choice

Based on the dividend discount model, an increase in which of the following will lower the current value of a stock?
I. amount of the next dividend
II. dividend growth rate
III. discount rate

• A)I only
• B)III only
• C)I and II only
• D)II and III only
• E)I, II, and III

---

Definitions:

Short-Run Aggregate-Supply Curve

Depicts the relationship between the price level and the quantity of goods and services that firms are willing to produce, taking some inputs as fixed.

Short-Run Phillips Curve

A graphical representation that shows the inverse relationship between short-term inflation and unemployment rates, suggesting a trade-off.

Inflation Rate

The percentage increase in the general level of prices for goods and services in an economy over a period of time, often measured annually.

Natural Rate

Often referred to as the natural rate of unemployment, it is the level of unemployment consistent with a stable rate of inflation.