Suppose That in 2018 the Expected Dividends of the Stocks

question 64

Multiple Choice

Suppose that in 2018 the expected dividends of the stocks in a broad market index equaled $240 million when the discount rate was 8% and the expected growth rate of the dividends equaled 6%. Using the constant-growth formula for valuation, if interest rates increase to 9%, the value of the market will change by ________.

• A) -10%
• B) -20%
• C) -25%
• D) -33%

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Individuals or households that receive financial assistance or aid from government programs.

Poverty Line

The minimum level of income deemed necessary to achieve an adequate standard of living in a given country or region.

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A statistical division of population into five equal groups according to income levels.

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A tax levied by the United States federal government on the annual income of individuals, corporations, trusts, and other legal entities.