Assume That You Are Using the Dividend Growth Model to Value

question 58

Multiple Choice

Assume that you are using the dividend growth model to value stocks.If you expect the market rate of return to increase across the board on all equity securities, then you should also expect the:

• A)market values of all stocks to increase, all else constant.
• B)market values of all stocks to remain constant as the dividend growth will offset the increase in the market rate.
• C)market values of all stocks to decrease, all else constant.
• D)stocks that do not pay dividends to decrease in price while the dividend-paying stocks maintain a constant price.
• E)dividend growth rates to increase to offset this change.

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Definitions:

Psychological Disorders

Mental disorders characterized by persistent disturbance or dysfunction in behavior, thoughts, or emotions that causes significant distress or impairment.

Anterograde Amnesia

The inability to form new memories following the onset of an amnesia-causing event, despite typically retaining memories from before the event.

Dissociative Fugue

A psychological state in which a person temporarily loses their sense of personal identity and impulsively wanders or travels away from their home.

Anxiety Disorder

A category of mental health disorders characterized by significant fear or anxiety that interferes with daily activities.