Stock Prices Increase When Expected Future Dividends _________,Interest Rates ________,Or

question 189

Multiple Choice

Stock prices increase when expected future dividends _________,interest rates ________,or the risk premium ________.

• A) increase;increase;increases
• B) increase;increase;decreases
• C) decrease;decrease;increases
• D) increase;decrease;decreases
• E) decrease;increase;decreases

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Definitions:

Hedging

A strategy used to offset potential losses or gains that may be incurred by a companion investment.

Economic Exposure

The risk that a company's cash flow, foreign investments, or earnings may suffer as a result of fluctuating exchange rates.

Derivative Security

A financial instrument whose value is based on the value of an underlying asset, such as stocks, bonds, commodities, or market indexes.

American Put Option

A put option that gives the holder the right to sell an asset at a specified price anytime before the expiration date.