Which of the Following Statements About the Equity Growth Rate

question 54

Multiple Choice

Which of the following statements about the equity growth rate is correct?

I. The higher the ROCE the higher equity growth rate, all other things equal.
II. The higher the dividend payout the higher the equity growth rate.
III. The equity growth rate is unaffected by the cost of debt.
IV. The equity growth rate indicates the expected growth in stock price each period.

• A)I, II, III, and IV
• B)I, II, and III
• C)I and III
• D)I only

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Definitions:

Unbiased Estimators

Statistical estimators that, on average, accurately predict the value of a population parameter without systematic error.

Smallest Variance

The smallest degree of spread or dispersion of observations around the mean in a dataset, indicating less variability.

Relatively Efficient

Refers to a process or system that achieves its goals with comparatively minimal waste of time, resources, or energy.

Larger Sample

Refers to increasing the number of observations in a sample to reduce random sampling error and make the sample statistics more representative of the population.