Assume that you are using the dividend growth model to value shares.If you expect the market rate of return to increase across the board on all equity securities, then you should also expect the:
A)market values of all shares to increase, all else constant.
B)market values of all shares to remain constant as the dividend growth will offset the
C)increase in the market rate.
D)market values of all shares to decrease, all else constant.
E)shares that do not pay dividends to decrease in price while the dividend-paying shares
Maintain a constant price.
m.dividend growth rates to increase to offset this change.

Question

Quizplus · Accepted Answer

According to the dividend growth model, an increase in the market rate of return will result in a decrease in the present value of future dividends. This means that all else constant, the market values of all shares will decrease.

Assume That You Are Using the Dividend Growth Model to Value