The Sustainable Growth Rate Is Based on the Premise That

question 27

Multiple Choice

The sustainable growth rate is based on the premise that:

• A)an additional dollar of debt will be acquired only if an additional dollar in equity shares is issued.
• B)no additional equity will be added to the firm.
• C)the debt-equity ratio will be held constant.
• D)the dividend payout ratio will be zero.
• E)the dividend payout ratio will increase at a steady rate.

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Definitions:

Other Goods

Refers to products or commodities that are considered as alternatives or options aside from the primary goods under consideration.

Competitive Rate

A pricing strategy often used by businesses to match or beat the prices offered by competitors in the market.

Short Run

A period in economics where at least one factor of production is fixed and cannot be altered.