If a Firm Has a Required Rate of Return Equal

question 5

Multiple Choice

If a firm has a required rate of return equal to the ROE,

• A) the firm can increase market price and P/E by retaining more earnings.
• B) the firm can increase market price and P/E by increasing the growth rate.
• C) the amount of earnings retained by the firm does not affect market price or the P/E.
• D) the firm can increase market price and P/E by retaining more earnings and increasing the growth rate.
• E) None of the options are correct.

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Definitions:

Maltose

A sugar composed of two glucose molecules bonded together, commonly produced during the digestion of starch.

Carboxypeptidase

An enzyme that breaks down proteins by hydrolyzing the peptide bond at the carboxyl-terminal (C-terminal) end of the protein.

Pancreas

An organ in the digestive and endocrine system that produces several important hormones, including insulin, and enzymes to aid in digestion.

Peptidases

Enzymes that break down peptides into amino acids by cleaving the peptide bonds between amino acids.