Which of the following increases the price an investor is willing to pay for stock?
A)The investor increases his estimate of the constant growth rate for dividends.
B)The investor decreases his estimate of the constant growth rate for dividends.
C)The investor increases his estimate of the required rate of return.
D)The investor assumes a higher beta for the stock.

Question

Quizplus · Accepted Answer

If the investor increases his estimate of the constant growth rate for dividends, this means that he expects the stock to have higher growth potential in the future. This would make the stock more attractive to investors and lead to an increase in demand, which would in turn increase the price of the stock.

Which of the Following Increases the Price an Investor Is