All else the same, an increase in the risk-free rate will cause a(n) _____ in stock price in all dividend valuation models.

Name: All else the same, an increase in the risk-free rate will cause a(n) _____ in stock price in all dividend valuation models.
Brand: Quizplus
Rating: 4.9 (50 reviews)

Question

Quizplus · Accepted Answer

An increase in the risk-free rate will lead to an increase in the discount rate used in dividend valuation models like the Gordon Growth Model, which will lead to a decrease in the stock price.

All Else the Same, an Increase in the Risk-Free Rate