Question
Suppose that in 2015 the expected dividends of the stocks in a broad market index equaled $210 million when the discount rate was 7% and
Suppose that in 2015 the expected dividends of the stocks in a broad market index equaled $210 million when the discount rate was 7% and the expected growth rate of the dividends equaled 5%. Using the constant-growth formula for valuation, if interest rates increase to 9%, the value of the market will change by _____.
| -10% | |
| 24% | |
| -25% | |
| -33% |
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Financial Markets and Institutions
Authors: Jeff Madura
11th Edition
1133947875, 9781305143005, 1305143000, 978-1133947875
