The lower the interest rate, the less expected future stock dividends will be discounted.

Name: The lower the interest rate, the less expected future stock dividends will be discounted.
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Question

Quizplus · Accepted Answer

This statement is true according to the principles of finance. When interest rates are low, the discount rate used to calculate the present value of future cash flows (including stock dividends) is also low, resulting in a smaller reduction in the present value of those future dividends.

The Lower the Interest Rate, the Less Expected Future Stock