242 Frederic S. Mishkin • Economics of Money, Banking, and Financial Markets, Seventh Edition

25)

In the Gordon growth model, a decrease in the required rate of return

(a)

increases the current stock price.

(b)

increases the future stock price.

(c)

has no effect on stock prices.

(d)

reduces the current stock price.

(e)

reduces the future stock price.

Answer:

#### Question Status: New

26)

Using the Gordon growth formula, if D1 is $1.00, ke is 12% or 0.12, and g is 10% or 0.10, then the current stock price is

(a)

$10.

(b)

$20.

(c)

$30.

(d)

$40.

(e)

$50.

Answer:

#### Question Status: New

27)

Using the Gordon growth formula, if D1 is $2.00, ke is 12% or 0.12, and g is 10% or 0.10, then the current stock price is

(a)

$20.

(b)

$50.

(c)

$100.

(d)

$150.

(e)

$200.

Answer:

#### Question Status: New

28)

Using the Gordon growth formula, if D1 is $1.00, ke is 10% or 0.10, and g is 5% or 0.05, then the current stock price is

(a)

$10.

(b)

$20.

(c)

$30.

(d)

$40.

(e)

$50.

Answer:

#### Question Status: New

29)

Using the Gordon growth formula, if the current stock price is $25, ke is 12% or 0.12, and g is 10% or 0.10, then D1 is

(a)

$0.25.

(b)

$0.50.

(c)

$0.75.

(d)

$1.00

(e)

$1.25.

Answer: