Exhibit 12.9 Use the Information Below for the Following Problem(S)

question 41

Multiple Choice

Exhibit 12.9
Use the Information Below for the Following Problem(S)
The aggregate market currently has a retention ratio of 60 percent, a required rate of return of 12 percent, and an expected growth rate for dividends of 4 percent.
-Refer to Exhibit 12.9.Starting with the initial conditions,you expect the retention ratio to be constant,the rate of inflation to decline by 2 percent,and the growth rate to decline by 1 percent.What is the expected P/E?

• A) 8.57
• B) 8.00
• C) 6.67
• D) 5.71
• E) 5.00

---

Definitions:

Unconscious Motivation

A driving force behind behaviors that the individual is not aware of, deeply embedded in the unconscious mind.

Psychosexual Stages

Freud's theory of five developmental stages from infancy to adulthood, where pleasure shifts from one body part to another.

Phallic Stage

A phase in Freudian psychosexual development occurring in early childhood, where the libido's focus is on the genital area.