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4. The equity premium and the value of stocks b. If the risk premium is larger, all else equal, what happens to the price of

4. The equity premium and the value of stocks

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b. If the risk premium is larger, all else equal, what happens to the price of the stock today? c. If the one-period interest rate increases, what happens to the price of the stock today? d. If the expected value of the stock at the beginning of period t+ 1 increases, what happens to the value of the stock today? e. Look at equation (1.150 Set 0.05 for all n. Set x-0.03. Compute the coefficients on SD +3 and SD 0. Compare the effect of S1 expected increase in a dividend 3 years from now and 10 years from now

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