Suppose that next year the expected dividends of the stocks in a broad market index equaled $10,000,000 when the discoun
Posted: Thu Dec 23, 2021 9:09 am
Suppose that next year the expected dividends of the stocks in a
broad market index equaled $10,000,000 when the discount rate was
10% and the expected growth rate of the dividends equaled 4%. Using
the constant-growth formula for valuation, if interest rates change
to 9%, the percentage change in the value of the market index is
_____. Note: Express your answers in strictly numerical terms. For
example, if the answer is 5%, write 0.05
broad market index equaled $10,000,000 when the discount rate was
10% and the expected growth rate of the dividends equaled 4%. Using
the constant-growth formula for valuation, if interest rates change
to 9%, the percentage change in the value of the market index is
_____. Note: Express your answers in strictly numerical terms. For
example, if the answer is 5%, write 0.05