Assume That You Are Using the Dividend Growth Model to Value

question 58

Multiple Choice

Assume that you are using the dividend growth model to value stocks.If you expect the market rate of return to increase across the board on all equity securities, then you should also expect the:

• A)market values of all stocks to increase, all else constant.
• B)market values of all stocks to remain constant as the dividend growth will offset the increase in the market rate.
• C)market values of all stocks to decrease, all else constant.
• D)stocks that do not pay dividends to decrease in price while the dividend-paying stocks maintain a constant price.
• E)dividend growth rates to increase to offset this change.

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Definitions:

Federalists

A political group in early U.S. history that advocated for a strong federal government and the ratification of the United States Constitution.

Economic Program

A coordinated set of policies and plans developed by a government or organization aimed at achieving specific financial and economic objectives, such as stimulating growth, reducing unemployment, or controlling inflation.

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The principle or practice by which a community governs itself through democratic means, allowing individuals within the community to participate directly or indirectly in decision-making processes.