Assume That You Are Using the Dividend Growth Model to Value

Multiple Choice

Assume that you are using the dividend growth model to value shares.If you expect the market rate of return to increase across the board on all equity securities, then you should also expect the:

A) market values of all shares to increase, all else constant.
B) market values of all shares to remain constant as the dividend growth will offset the
C) increase in the market rate.
D) market values of all shares to decrease, all else constant.
E) shares that do not pay dividends to decrease in price while the dividend-paying shares
Maintain a constant price.
m.dividend growth rates to increase to offset this change.