Cause the stock price to increase

Assignment Help Financial Management

Reference no: EM131448281

Which of the following will cause the stock price to increase if you assume that the constant growth pricing model [P(0) = D(1) / (r(s) – g)] is correct:

a. Decrease in Dividends

b. Increase in the required rate of return

c. Increase in the growth rate

d. Increase in the Required Rate of Return and Decrease in dividends

Reference no: EM131448281

Questions Cloud

Create cash flow diagram of the savings amounts : An educational saving account is created. The account is set up such that the beneficiary will receive all money in the account (principal as well as all accrued interest) after 16 years from the present. Please create a cash flow diagram of the savi..

Calculating future values : You are scheduled to receive dollar 13,000 in two years. When you receive it, you will invest it for six more years at 7.5 percent per year. How much will you have in eight years?

Calculating the number of periods : Calculating the Number of Periods. You're trying to save to buy a new dollar 150,000 Ferrari. You have dollar 35,000 today that can be invested at your bank. The bank pays 2.1 percent annual interest on its accounts. How long will it be before you ha..

Calculating rates of return : Assume the total cost of a college education will be dollar 295,000 when your child enters college in 18 years. You presently have dollar 53,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child'..

Cause the stock price to increase : Which of the following will cause the stock price to increase if you assume that the constant growth pricing model [P(0) = D(1) / (r(s) – g)] is correct:

Simple interest on its savings account balances : First City bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a deposit of $8,100 in each bank, how much more money would you earn from your Second Ci..

Expected future dividends and expected future growth rate : Two investors are considering purchasing Coca-Cola's stock. They agree on the expected future dividends and the expected future growth rate. Further they are on agreement on the riskiness of the stock and the associated required rate of return. Howev..

What is the expected rate of return for a stock : What is the expected rate of return for a stock that is expected to pay $1 dividend next year and is currently selling for $10. The price of the stock next year is expected to be $11.87 by next year. Write your answer as a decimal (i.e. do not change..

When we calculate value of an asset or intrinsic value : When we calculate the value of an asset or the intrinsic value, this number reflects: A bond's yield to maturity varies from investor to investor because each investor has his or her own required return.

User Account

All Pages