Option B is correct
An increase in investor risk aversion
With increase in risk aversion investor will require higher expected rate, leading to fall in stock price
Which of the following would cause a decrease in a firms stock price, all else held...
All else held constant, which one of these is most apt to decrease the average cost of capital (WACC) of a leveraged firm? a) An increase in a market's average return b) A decrease in the tax rate c) An increase in the treasure rate when the firm's equity beta > 1 d) An increase in the firm's risk and equity beta
Which of the following will cause the stock price to decrease if you assume that the constant growth pricing model [P(0) = D(1) / (r(s) – g)] is correct: Increase in Dividends Increase in the required rate of return Increase in the growth rate Decrease in the Required Rate of Return and increase in dividends
Which of the following would cause the price of equity to decrease according to the dividend discount model? a. none of the other choices are correct b. an increase in the discount rate c. an increase in expected future dividends d. an increase in the growth rate of expected future dividends
A decrease in which one of the following will increase the cash cycle, all else held constant? a. Payables turnover b. Days sales in inventory c. Operating cycle d. Inventory turnover rate e. Accounts receivable period
Which of the following statements is true? O Increasing dividends will always decrease the stock price, because the firm is depleting internal funding resources. O Increasing dividends will always increase the stock price. Increasing dividends may not always increase the stock price, because less earnings may be invested back into the firm and that impedes growth Walter Utilities is a dividend paying company and is expected to pay an annual dividend of $2.05 at the end of the year. Its...
Question 38 1.66 pts Holding all else constant, an increase in the market demand for a product in a competitive market would cause a decrease in profits for a firm. the average total cost (ATC) curve of the firms to increase. the marginal revenue (MR) curve of the firms to increase. a decrease in the price a firm could charge for the product. the marginal cost (MC) curve of the firms to increase.
Assuming all else is constant, which of the following statements is CORRECT? Answers: a. Price sensitivity as measured by the percentage change in price due to a given change in the required rate of return decreases as a bond's maturity increases. b. A 20-year zero coupon bond has more reinvestment rate risk than a 20-year coupon bond. c. For any given maturity, a 1.0 percentage point decrease in the market interest rate would cause a larger dollar capital gain than...
Which of the following, holding all other variables constant, will cause an INCREASE in a constant growth stock's current value? An increase in the number years the stock is held An increase in the market return (k) An increase in the growth rate Both "An increase in the growth rate" & "An increase in the market return (k)" All of these choices are correct.
Please help me with 15.7-15.8 15-7 Holding all else constant, what effect would the following have on a company's P/E ratio? (highlight answer, delete others) (COME BACK) a. An increase in expected growth rate of earnings. Up Down No change b. A decrease in expected dividend payout ratio. Up Down No change c. An increase in the risk-free rate of return. Up Down No change d. An increase in the risk premium. Up Down No change e. A decrease in...
25. When the price of a good decreases and all else is held constant a. both consumer surplus and producer surplus decrease b. producer surplus decreases c. both consumer surplus and producer surplus increase d. producer surplus increases