The Dividend Payout Ratio for the Aggregate Market Is 65

question 5

Multiple Choice

The dividend payout ratio for the aggregate market is 65 percent,the required rate of return is 13 percent,and the expected growth rate for dividends is 8 percent.Compute the current earnings multiple.

• A) 7
• B) 13
• C) 4.61
• D) 14.61
• E) None of the above

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Definitions:

Liquidation Transactions

Sales or disposals of assets by a company, typically occurring when the company is ceasing operations, to pay off creditors and distribute any remaining assets to shareholders.

Profit and Loss Ratio

A financial metric that compares the profits and losses of a business in a specific time period, often used to gauge operational performance.

Liquidation

The process of winding up a company’s financial affairs by selling off assets to pay creditors and distributing any remaining assets to shareholders.