Question

All else the same, an increase in the dividend growth rate on a stock will cause a(n) _______ in the stock price.

Answer 1

An increase in the dividend growth rate on a stock will cause a decrease in the stock price.

Step-by-step explanation:

An increase in the dividend growth rate on a stock will cause a decrease in the stock price. The dividend growth rate refers to the rate at which a company increases its dividends over time. When the rate of growth of dividends increases, it implies that the company is returning a larger portion of its profits to shareholders as dividends. As a result, investors may perceive the stock as being less valuable and would be willing to pay a lower price for it.