The value of common stock will likely decrease if:
A) the investment horizon decreases.
B) the growth rate of dividends increases.
C) the discount rate increases.
D) dividends are discounted back to the present.

Question

Quizplus · Accepted Answer

An increase in the discount rate will decrease the value of future dividends and expected returns, leading to a decrease in the value of common stock.

The Value of Common Stock Will Likely Decrease If