Use the following information to answer Problems

-Identify, within the context of the constant dividend growth model, how each of the following fundamental factors would affect the P/E ratio.
i. The riskiness (beta) of ABC increases substantially.
ii. The estimated growth rate of ABC's earnings and dividends increases.
iii. The dividend payout ratio of ABC increases.
iv. The market risk premium increases.

Question

Use the following information to answer Problems
 
-Identify, within the context of the constant dividend growth model, how each of the following fundamental factors would affect the P/E ratio.
i. The riskiness (beta) of ABC increases substantially.
ii. The estimated growth rate of ABC's earnings and dividends increases.
iii. The dividend payout ratio of ABC increases.
iv. The market risk premium increases.

Quizplus · Accepted Answer

The Answer of Use the following information to answer Problems
 
-Identify, within the context of the constant dividend growth model, how each of the following fundamental factors would affect the P/E ratio.
i. The riskiness (beta) of ABC increases substantially.
ii. The estimated growth rate of ABC's earnings and dividends increases.
iii. The dividend payout ratio of ABC increases.
iv. The market risk premium increases.

Use the Following Information to Answer Problems