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If an analyst uses the constant dividend growth model to value a stock, which of

ID: 2760698 • Letter: I

Question

If an analyst uses the constant dividend growth model to value a stock, which of the following is certain to cause the analyst to increase her estimate of the current value of the stock (assuming, of course, that all other factors are held constant)? If an analyst uses the constant dividend growth model to value a stock, which of the following is certain to cause the analyst to increase her estimate of the current value of the stock (assuming, of course, that all other factors are held constant)?

Explanation / Answer

By decreasing the required rate of return for the stock

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