How will the price of a stock be affected if the dividend growth rate is decreased?
A) increase
B) either increase or no change
C) no change
D) either decrease or no change
E) decrease

Question

Quizplus · Accepted Answer

If the dividend growth rate is decreased, it means the company is likely experiencing some financial difficulties or is choosing to reinvest more profits into the company rather than paying out to shareholders. This can lead to a decrease in investor confidence and a decrease in demand for the stock, causing the price to go down. Therefore, the answer is E - decrease.

How Will the Price of a Stock Be Affected If