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Using the Constant Growth Model, an Increase in the Required

Question 35

Multiple Choice

Using the constant growth model, an increase in the required rate of return from 19 to 17% combined with an increase in the growth rate from 11 to 9% would cause the price to


A) Fall more than 2%
B) Fall less than 2%.
C) Remain constant.
D) Rise more than 2%.
E) Rise less than 3%.

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