All else equal, the price of a stock will increase if

Question

Quizplus · Accepted Answer

If the expected growth rate of a stock increases, investors are more willing to pay a higher price for the stock due to the potential for higher future dividends and capital gains. Similarly, if the expected future dividend payment increases, investors will also be willing to pay a higher price for the stock. Therefore, both B and C are correct and will lead to an increase in the price of a stock. However, a higher required rate of return on the stock will decrease its price. If the expected growth rate of a company increases, investors will be willing to pay more for its stock, which will increase the stock price. Similarly, if the expected future dividend payment increases, investors will be willing to pay more for the stock, which will also increase the stock price. Therefore, both B and C are correct. The required rate of return on the stock (option A) may also affect the stock price, but it is not necessarily a direct relationship as it depends on other factors such as market conditions, company performance, and risk perception.

All Else Equal, the Price of a Stock Will Increase