Which of the following should cause the price of a share of stock to rise ?

Correct answer: E. All of these answers

  • A. None of these answers
  • B. An increase in expected dividends
  • C. A reduction in aggregate risk
  • D. A reduction in the interest rate
  • E. All of these answers

Explanation

Share value rises when expected dividends increase, when risk falls, or when the interest rate falls because future payments are discounted less heavily. Therefore all three listed developments support a higher share price.

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