Using the Constant Growth Model, an Increase in the Required

question 30

Multiple Choice

Using the constant growth model, an increase in the required rate of return from 17 to 20 percent combined with an increase in the growth rate from 8 to 11 percent would cause the price to

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

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Definitions:

Value Added

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Established standards of conduct that dictate how a person or organization should behave in a professional and moral manner.

Telemarketing Industry

The industry involving the direct marketing of goods or services to potential customers over the telephone, email or through web conferencing.