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:

Apparel Industry

The sector of the economy that is involved in the design, production, and distribution of clothing and accessories.

Cotton

A natural fiber harvested from the cotton plant, used primarily in the textile industry for making fabrics.

Water Usage

The act of using water for various purposes, including domestic, agricultural, industrial, and recreational activities, which can have significant environmental and economic implications.

Corporate Social Responsibility (CSR)

A self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public.