A decrease in the will cause an increase in common stock value.
A) growth rate
B) required rate of return
C) last paid dividend
D) both B and C

The correct answer is letter "B": required rate of return.

Explanation:

The required rate of return helps investors determine where to invest and allows them to compare their investment returns to all other choices. They can do this by taking the Risk-Free Rate of Return, Inflation, and Liquidity into account. The required risk of return is subjective and varies from investor to investor.

The lower the required risk of return implies investors are confident in the stock providing them profits which is a signal of stability of that asset that will be interpreted in an increase in the stock value.

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