Use the following to answer questions 55 - 58: $\mathrm { P } _ { \text {today } } = \frac { \mathrm { D } _ { \text {today } } ( 1 + g ) } { r f + r p - g }$
-Which of the following will cause a reduction in the current price of a stock?

Question

Quizplus · Accepted Answer

A decrease in the current dividend or an increase in the risk-free return will both individually cause a reduction in the current price of a stock, as they either reduce the numerator or increase the denominator of the formula.

Use the Following to Answer Questions 55 - 58 Ptoday =Dtoday (1+g)rf+rp−g\mathrm { P } _ { \text {today } } = \frac { \mathrm { D } _ { \text {today } } ( 1 + g ) } { r f + r p - g }Ptoday ​=rf+rp−gDtoday ​(1+g)​

Use the Following to Answer Questions 55 - 58 $\mathrm { P } _ { \text {today } } = \frac { \mathrm { D } _ { \text {today } } ( 1 + g ) } { r f + r p - g }$