A stock that pays a constant annual dividend will have a market price that

Question

Quizplus · Accepted Answer

The market price of a stock is inversely related to the market rate of return. When the market rate of return increases, investors demand a higher return on their investment, so the price of the stock decreases to reflect this. Since a constant annual dividend does not change, it does not affect the market price. Therefore, the market price of the stock will decrease when the market rate of return increases.

A Stock That Pays a Constant Annual Dividend Will Have