CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

In applying the constant-growth dividend discount model, lowering the required rate of return on a stock will cause the stock's intrinsic value to ______.

A. decrease
B. increase
C. decrease or increase, depending upon other factors
Correct Answer: B

User Contributed Comments 7

User Comment
thekapila it always depend on k-g is we lower k such that k <g then the model might not be valid.
morek Decreased Required Rate of Return will decrease denominator, so increase value.
hoyleng k has inverse relationship...
tochiejehu REQUIRED RATE OF RETURN AND INTRINSIC VALUE HAVE AN INVERSE RELATIONSHIP
chesschh Decreasing the denominator, increases the variable. Always
khalifa92 why the caps tho
khalifa92 GROWTH RATE AND INTRINSIC VALUE HAVE LOVELY RELATIONSHIP
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