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:

Pay Range

The scope of compensation, from minimum to maximum, that an organization is willing to pay for a specific job or level of responsibility.

Superior Performance

A level of achievement that significantly surpasses the average or expected results.

Specifying

The act of identifying or detailing the exact requirements or characteristics of something, often used in the context of product development or contractual agreements.

Measuring Performance

The process of evaluating employee effectiveness, productivity, or outcomes against predetermined objectives or standards.