Dividend growth model
Base this answer on the dividend growth model. If you expect the market rate of return to increase across the board on all equity securities then you should also expect:
an increase in all stock values
all stock values to remain constant
a decrease in all stock values
dividend paying stocks to maintain a constant price while non dividend paying stocks decrease in value
dividend paying stocks to increase in price while non dividend paying stocks decrease in value
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The solution explains the correct alternative in respect of dividend growth model
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