Answer this question based on the dividend growth model.If you expect the market rate of return to increase across the board on all equity securities,then you should also expect:
A)an increase in all stock values.
B)all stock values to remain constant.
C)a decrease in all stock values.
D)dividend-paying stocks to maintain a constant price while non-dividend paying stocks decrease in value.
E)dividend-paying stocks to increase in price while non-dividend paying stocks decrease in value.

Question

Quizplus · Accepted Answer

The dividend growth model suggests that as the required rate of return (market rate of return) increases, the present value of future dividends decreases, leading to a decrease in stock values.

Answer This Question Based on the Dividend Growth Model