Assume further that long-term annual market return

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Assume that the Constant-Growth DDM is the appropriate valuation model for a stock index. Assume further that the long-term annual market return is expected to be 8%, the long-term expected growth rate in dvidends is expected to be 3.5% and that the Dow Jones Industrial Average (DJIA) is fairly valued at 18,000. If investors change their expectation for the long-term growth rate in dividends from 3.5% to 2.5%, what would be the expected change in the value of the DJIA? A. +18.97% B. -18.97% C. +15.38% D. -15.38%.

Reference no: EM131492659

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