According to the constant growth in dividends price formula given in the textboo

Question

According to the constant growth in dividends price formula given in the textbook, if the dividend to be paid one year from today decreases and all other factors remain constant, the price of the stock will __________; if the growth rate of all future dividends increases and all other factors remain constant, the price of the stock will __________; and if the required rate of return increases and all other factors remain constant, the price of the stock will __________.

a. Decrease; decrease; decrease
b. Increase; increase; decrease
c. Decrease; increase; decrease
d. Increase; increase; increase
e. None of the answers listed above are correct.

Explanation / Answer

c. Decrease; increase; decrease

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