Using the Gordon Growth Model,a Stock's Current Price Will Increase

question 35

Multiple Choice

Using the Gordon growth model,a stock's current price will increase if

• A)the dividend growth rate increases.
• B)the growth rate of dividends falls.
• C)the required rate of return on equity rises.
• D)the expected sales price rises.

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Definitions:

Weighted Average Cost

A method to calculate the average cost of goods produced or acquired, weighted by the quantities.

SML Approach

A representation of the Capital Asset Pricing Model (CAPM) that displays the expected return of a security as a function of its systemic risk.

Debt-To-Assets Ratio

A financial metric indicating the proportion of a company's assets that are financed by debt, used to assess the company's leverage and financial stability.

Flotation Costs

Expenses incurred by a company in issuing new securities, including fees to underwriters, legal fees, and printing costs.