Explanation:

In the H-model, a decrease in the transition period (which means H decreases) would increase the expected rate of return, all else being equal.

Reasoning:

1. H-model formula: P₀ = [D₀ × (1 + gₗ)] / (r - gₗ) + [D₀ × H × (gₛ - gₗ)] / (r - gₗ)

2. Relationship: When H decreases (shorter transition period), the second term in the numerator [D₀ × H × (gₛ - gₗ)] decreases.

3. Impact on r: For a given stock price P₀, if the numerator decreases, the denominator (r - gₗ) must also decrease to maintain the equality. Since gₗ is constant, r must increase.

4. Intuition: A shorter transition period means the high initial growth rate persists for a shorter time, reducing the stock's value. To justify the same stock price, investors would require a higher expected return.

Therefore, decreasing the transition period increases the expected rate of return in the H-model framework.