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The residual income model defines stock price as book value plus the present value of residual income. What is the effect on stock price in

The residual income model defines stock price as book value plus the present value of residual income. What is the effect on stock price in a given period if the firm's cost of capital is greater than its return on equity? 1- Cannot be determined 2- No effect 3-Stock price increases 4-Stock price decreases

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