Using the Constant Growth Model,a Decrease in the Required Rate

question 46

Multiple Choice

Using the constant growth model,a decrease in the required rate of return from 15 to 13 percent combined with an increase in the growth rate from 5 to 6 percent would cause the price to

• A) Rise more than 50%.
• B) Rise less than 50%.
• C) Remain constant.
• D) Fall more than 50%.
• E) Fall less than 50%.

---

Definitions:

Strangers

Individuals who are not known personally or familiar to someone.

Larger Groups

Describes collections of individuals that exceed the small, interpersonal dynamics of smaller groups, influencing social behavior differently.

Pluralistic Ignorance

A situation in which individuals rely on others to identify a norm but falsely interpret others’ beliefs and feelings, resulting in inaction.

Normative Social Influence

The influence that leads individuals to conform in order to be accepted and liked by their social group.