Using the constant growth model, an increase in the required rate of return from 14 to 18 percent combined with an increase in the growth rate form 8 to 12 percent would cause the stock price to

Question

Quizplus · Accepted Answer

The correct answer is A because the increase in the required rate of return will have a greater impact on the stock price than the increase in the growth rate.

Using the Constant Growth Model, an Increase in the Required