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The Impact from Rapid Dividend Growth on a Stock's Current Ptoday =Dtoday (1+g)rf+rpg \mathrm{P}_{\text {today }}=\frac{\mathrm{D}_{\text {today }}(1+g)}{r f+r p-g}

Question 50

Multiple Choice

The impact from rapid dividend growth on a stock's current price will be: Ptoday =Dtoday (1+g) rf+rpg \mathrm{P}_{\text {today }}=\frac{\mathrm{D}_{\text {today }}(1+g) }{r f+r p-g}


A) negative, since the company is paying out profits to stockholders.
B) positive since rapid dividend growth causes stockholders to expect higher future dividends.
C) zero; only current dividends are used to determine the current price of a stock.
D) positive, but only if the corporation does not have any debt.

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