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Using the Constant Growth Model, an Increase in the Required

Question 14

Multiple Choice

Using the constant growth model, an increase in the required rate of return from 17 to 20% combined with an increase in the growth rate from 8 to 11% would cause the price to


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

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