Based on the dividend discount model, an increase in which of the following will lower the current value of a stock?
I. amount of the next dividend
II. dividend growth rate
III. discount rate
A)I only
B)III only
C)I and II only
D)II and III only
E)I, II, and III

Question

Quizplus · Accepted Answer

III only. According to the dividend discount model, the current value of a stock increases with higher dividends and dividend growth rates, but decreases with a higher discount rate.

Based on the Dividend Discount Model, an Increase in Which