If a Company Reports That It Is Going to Have $\mathrm{P}_{\text {today }}=\frac{\mathrm{D}_{\text {today }}(1+g)}{r f+r p-g}$

question 73

Multiple Choice

If a company reports that it is going to have a difficult time meeting its debt obligations, you would expect the Ptoday: $\mathrm{P}_{\text {today }}=\frac{\mathrm{D}_{\text {today }}(1+g) }{r f+r p-g}$

• A) to fall since the risk-free return will rise.
• B) to rise since the Dtoday will likely fall.
• C) to fall since the risk premium will likely rise.
• D) to remain about the same until the Dtoday actually changes.

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