Which of the Following Increases the Price an Investor Is

question 40

Multiple Choice

Which of the following increases the price an investor is willing to pay for stock?

• A)The investor increases his estimate of the constant growth rate for dividends.
• B)The investor decreases his estimate of the constant growth rate for dividends.
• C)The investor increases his estimate of the required rate of return.
• D)The investor assumes a higher beta for the stock.

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Definitions:

Drive

An aroused state that occurs because of a physiological need.

Optimum Arousal Theory

The theory that individuals perform best and are most productive at a moderate level of arousal, rather than at lower or higher levels.

Moderate Arousal

An optimal level of alertness or activation that enhances performance on tasks or activities, according to Yerkes-Dodson Law.

Biological Deprivation

A lack of essential biological needs, such as food, water, and sleep, that can lead to severe physical and psychological consequences.