Find which is likely to happen next

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Problem 1: A company just paid $4 dividend and the dividend is expected to grow at a constant rate of 10%. Current stock price is $100. If the required rate of return is 13%, which is likely to happen next?

Group of answer choices

Option 1: Stock price will decrease and the expected return will decrease.

Option 2: Stock price will decrease and the expected return will increase.

Option 3: Stock price will increase and the expected return will increase.

Option 4: Stock price will increase and the expected return will decrease.

Reference no: EM132643220

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