Based on the Dividend Discount Model, if a company’s projected rate of growth in earnings and dividends is expected to increase, what effect will it have on its stock? Question 9 options: The value would decrease. The value would increase. The value would not change. It is undeterminable.
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Based on the
Question 9 options:
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The value would decrease. |
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The value would increase. |
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The value would not change. |
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It is undeterminable. |
formula for dividend discount model:
P = D1/ r - g
D1 represents Dividend
g represents growth
if there is increase in the value of growth and dividend, the value would increase
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