Using the Constant Growth Model, an Increase in the Required

question 35

Multiple Choice

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

• A) Fall more than 2%
• B) Fall less than 2%.
• C) Remain constant.
• D) Rise more than 2%.
• E) Rise less than 3%.

---

Definitions:

Norms

Social expectations that guide the behavior of individuals within a society.

Values

The principles or standards of behavior that are considered important in life or in a particular culture.

Cultural Change

The transformation of a society's norms, values, beliefs, and practices over time.

American Stores

historically refers to a chain of supermarkets and drugstores in the United States, illustrating an example of retail business operation.