Suppose That in 2009 the Expected Dividends of the Shares

question 23

Multiple Choice

Suppose that in 2009 the expected dividends of the shares in a broad market index equalled $240 million when the discount rate was 8% and the expected growth rate of the dividends equalled 6%. Using the constant growth formula for valuation, if interest rates increase to 9% the value of the market will change by ________.

• A)-10%
• B)-20%
• C)-25%
• D)-33%

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Definitions:

Banking Regulators

Authorities or bodies responsible for overseeing the banking industry, ensuring compliance with laws, and maintaining financial stability.