The Next Questions Refer to the Following

Multiple Choice

The next questions refer to the following.
Suppose that a firm's dividends have been growing by 4% annually and this year's dividend is $10 per share.
-If investors perceive the stock to have become riskier and demand a 9% rate of return,then

A) the share price rises by 1/8
B) the share price falls by 20%
C) the dividend yield declines by 1 percentage point
D) the firm will reduce the dividend by 25%
E) the equity premium declines by 1/9