Using the Constant Growth Model, an Increase in the Required

question 39

Multiple Choice

Using the constant growth model, an increase in the required rate of return from 14 to 18% combined with an increase in the growth rate from 8 to 12% would cause the price to

• A) Fall more than 4%
• B) Fall less than 4%.
• C) Rise more than 4%
• D) Rise less than 4%.
• E) Remain constant.

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Definitions:

Neutral Solution

A solution of pH 7; there are equal concentrations of hydrogen ions [H+] and hydroxide ions [OH-]. Compare with acidic solution and basic solution.

Valence Electrons

The outermost electrons of an atom, which determine its chemical bonding properties.

Chemical Properties

Chemical properties are characteristics of a substance that determine how it interacts with other substances during chemical reactions, defining its composition and behavior.

Buffer

A solution that resists changes in pH when acid or alkali is added to it.