According to the dividend valuation model for common stocks

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According to the Dividend Valuation Model for common stocks, what do you think woud happen if the Fed stopped purchasing government securities?

a. Nothing, interest rates on bonds and common stocks are not related

b. Stock prices would go up because bond prices would go down and they are inversely related

c. Stock prices would go down because as bond prices decrease, required return on stocks would increase

d. Stock prices would go up because the as interest rates rise so does the value of the U.S. dollar relative to other currencies

e. Nothing because monetary policy doesn't impact stocks, only the bond market

Reference no: EM13729810

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