In the one-period valuation model,a stock's value falls if the ________ rises.

Question

Quizplus · Accepted Answer

In the one-period valuation model, the value of a stock is determined by the expected future price and the required return on equity. Therefore, if the required return on equity (which represents the investor's required rate of return) increases, the stock's value will decrease. Dividends and current price may affect the value of the stock, but they are not the primary factors in the one-period valuation model.

In the One-Period Valuation Model,a Stock's Value Falls If the ________