Using the Constant Growth Model, an Increase in the Required

question 33

Multiple Choice

Using the constant growth model, an increase in the required rate of return from 19 to 17 percent combined with an increase in the growth rate from 11 to 9 percent would cause the price to

• A) fall more than 2 percent.
• B) fall less than 2 percent.
• C) remain constant.
• D) rise more than 2 percent.
• E) rise less than 3 percent.

---

Definitions:

Cost-effectiveness

A measure of the efficiency of a product, service, or process, where effectiveness is weighed against costs.

ADR

Alternative Dispute Resolution; methods for resolving disputes outside of the judiciary system, such as arbitration or mediation.

Judicial System

The branch of government responsible for interpreting the law, administering justice, and resolving legal disputes.

Policy Gaps

Situations where there is a lack of adequate policies to address certain issues or challenges, often leading to unmet needs or inefficiencies.