QUESTION 16

Assume you are using the dividend growth model to value stocks. If you expect the market rate of returns to increase across the board on all equity securities, then you should also expect the: a. market values of all stocks to decrease. b. market values of all stocks to remain constant as the dividend growth will offset the increase in the market rate. c. market values of all stocks to increase, all else constant. d. dividend stocks to maintain a constant price while non-dividend paying -paying stocks decrease in value. e. dividend growth rates to increase to offset this change