FINANCE al Review Questions ch 678 Question 28 of 30 Bob is

FINANCE al Review Questions (ch. 6,7,8) Question 28 (of 30) Bob is an optomist and he expects the required rat securities (stocks).-cetens paribus. From this we can infer that Bob expects: e of retun to decrease across the board on all equity O An increase in all stock values O A decrease in all stock values. O Dividend-paying stocks O Duwdend-payng stockc to increase inpnce wnite non aivadend payng socs remain constentn vaue s to maintain a constant price while non-dividend paying stocks decrease in All stock values to remain constant

Solution

If the bob expects the required rate of return to decrease then All stock values are expected to increase because required rate of return and future cash flows are inversely proportional to each other .Therefore,

Correct answer is:An increase in all values