Which of the following would produce an increase in the price of a bank's stock?

Question

Quizplus · Accepted Answer

All of the options listed would lead to an increase in the price of a bank's stock. An increase in expected future dividends (A) and expectations of more cash dividends in the near future (B) both suggest that the stock will provide more income to its holders, making it more valuable. A reduction in the required rate of return (C) means that investors are willing to accept a lower return for holding the stock, which typically occurs when the stock is perceived as less risky or when market interest rates fall, both of which would increase the present value of future dividends and thus the stock price.

Which of the Following Would Produce an Increase in the Price