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.