How would proponents of the efficient markets hypothesis use the Gordon-Growth model to explain the movement of stock prices during the Financial Crisis of 2007-2009?
What will be an ideal response?
The decline in stock prices, though, may have been consistent with substantial changes in the expectations of investors with respect to both the future growth rate of dividends and the degree of risk involved in investing in stocks. The Gordon growth model indicates that an increase in rE and a decrease in g will cause a decline in stock prices.
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According to real business cycle theory,
A. monetary factors affecting aggregate demand cause macroeconomic instability. B. when real wages fall during recessions, "real" unemployment rates rise. C. recessions result from declines in long-run aggregate supply, rather than decreases in aggregate demand. D. the net long-run costs of business fluctuations are severe.
After the sugar substitute saccharin was found to cause cancer in laboratory mice, its price dropped dramatically. This change in the price was because
A) the supply of saccharin decreased. B) the demand for saccharin decreased. C) the government ordered the price reduction. D) saccharin producers felt sorry for their past customers and were making an honest attempt to compensate them.
A tariff is a tax on either imports or exports
a. True b. False
Poverty in the United States is defined as having an income that is less than the ____ level that is necessary to provide the basic necessities of life
a. sustainable b. relative c. absolute d. lowest quintile