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Suppose that in 2020 the expected dividends of the stocks in a broad market index equaled $200 million when the discount rate is 7% and
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Suppose that in 2020 the expected dividends of the stocks in a broad market index equaled $200 million when the discount rate is 7% and the expected growth rate of the dividends is 3%. Using the constant-growth formula for valuation, if interest rates decrease to 5%, the value of the market will change by
A. 50%
B. -100%
C. 50%
D. 100%
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