Using the constant growth model, an increase in the required rate of return from 14 to 18% combined with an increase in the growth rate from 8 to 12% would cause the price to
A) Fall more than 4%
B) Fall less than 4%.
C) Rise more than 4%
D) Rise less than 4%.
E) Remain constant.

Question

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The Answer of Using the constant growth model, an increase in the required rate of return from 14 to 18% combined with an increase in the growth rate from 8 to 12% would cause the price to
A) Fall more than 4%
B) Fall less than 4%.
C) Rise more than 4%
D) Rise less than 4%.
E) Remain constant.

Using the Constant Growth Model, an Increase in the Required