Suppose that in 2009 the expected dividends of the shares in a broad market index equalled $240
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Question:
Suppose that in 2009 the expected dividends of the shares in a broad market index equalled $240
million when the discount rate was 8% and the expected growth rate of the dividends equalled 6%.
Using the constant growth formula for valuation, if interest rates increase to 10% the value of the
market will change by ________.
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