A Toronto fiRm Wants to Maintain a Growth Rate of 8

question 41

Multiple Choice

A Toronto firm wants to maintain a growth rate of 8% without incurring any additional equity financing. The firm maintains a constant debt-equity ratio of .5, a total asset turnover ratio of .83,
And a profit margin of 8 percent. What must the retention ratio be?

• A) 71.8 %
• B) 72.7 %
• C) 74.4%
• D) 75.1 %
• E) 76.3%

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Definitions:

Financial Deregulation

The process of removing or reducing government restrictions on financial markets and institutions, often with the intent to increase efficiency, competitiveness, and innovation in the financial sector.

European Banks

Financial institutions based in Europe, playing key roles in the global financial system through lending, investment, and other financial services.

Asian Nations

Refers to the countries located on the Asian continent, characterized by diverse cultures, languages, and economies.

Investment Products

Financial instruments such as stocks, bonds, mutual funds, and ETFs available for investors to buy, seeking to generate returns.