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Fed chair, Jerome Powell, announces a decrease in interest rates today. According to the dividend growth model, what should happen to stock prices? Multiple Choice

Fed chair, Jerome Powell, announces a decrease in interest rates today. According to the dividend growth model, what should happen to stock prices?

Multiple Choice

  • Stock prices will remain constant as the dividend growth will offset the increase in the market rate.

  • Stock prices should increase.

  • Stock prices should decrease.

  • Market values are unrelated to changes in market rates, so prices will not change.

  • Stocks that do not pay dividends to decrease in price while the dividend-paying stocks maintain a constant price.

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