Suppose That the Total Value of Dividends to Be Paid

question 99

Multiple Choice

Suppose that the total value of dividends to be paid by companies in the Narnian stock market index is $100 billion.Investors expect dividends to grow over the long term by 5% annually,and they require a 10% return.Now a collapse in the economy leads investors to revise their growth estimate down to 4%.By how much should market values change?

• A) −16.67%.
• B) zero.
• C) −20%.
• D) +20%.

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Definitions:

Sequential Lineup

A police procedure in identity parades where suspects are presented one by one to a witness, instead of all at once, to make identifications less suggestive and potentially more accurate.

Foils

Individuals or objects used in experiments or studies as a contrast to the main subjects, to provide a benchmark or control condition.

Sentencing Circles

A restorative justice practice that involves community members in the sentencing process, aiming to rehabilitate the offender and heal the community.

Criminal Justice System

A structure established by governments to enforce the law, adjudicate offenders, and ensure the administration of justice.