According to the Price/earnings Approach to Stock Valuation, If the Dividend

question 67

Multiple Choice

According to the price/earnings approach to stock valuation, if the dividend growth rate is expected to drop or if the required return goes up, the net effect is a

• A) higher P/E ratio.
• B) lower P/E ratio.
• C) higher stock price.
• D) higher retention rate.

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Definitions:

Unconsciously Believes

Refers to beliefs that individuals hold without being aware of them, which can influence thoughts, feelings, and behaviors beyond conscious awareness.

Irrational

Characterized by actions or thoughts that lack reason or sound judgment, often driven by emotions rather than logical reasoning.

Emotional Part

A component of human psychology that involves feelings, moods, and affective states.

Rational Part

The aspect of the human mind or personality that is responsible for logic, reasoning, and analytical thought.