Answer This Question Based on the Dividend Growth Model

Multiple Choice

Answer this question based on the dividend growth model. If you expect the market rate of return to increase across the board on all equity securities, then you should also expect:

A) an increase in all stock values.
B) all stock values to remain constant.
C) a decrease in all stock values.
D) dividend-paying stocks to maintain a constant price while non-dividend paying stocks decrease in value.
E) dividend-paying stocks to increase in price while non-dividend paying stocks remain constant in value.