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Change in value

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Please help with the following question.

In 2009 the expected dividends of the stocks in the broad market index are equal to $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 9% the value of the market will change by _________?

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Solution Summary

The solution explains how to determine the change in value given a change in interest rate

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Using the constant growth formula
Value of market = Expected ...

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