The Dividend Payout Ratio for the Aggregate Market Is 65

question 95

Multiple Choice

The dividend payout ratio for the aggregate market is 65 percent,the required rate of return is 12 percent,and the expected growth rate for dividends is 6 percent.Compute the current earnings multiple.

• A) 5.41
• B) 16.25
• C) 6.25
• D) 10.83
• E) None of the above

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Definitions:

Retail Business

A commercial strategy where products are sold directly to end-users, usually in small amounts.

Legal Taxable Entity

An organization or individual recognized by law as a unit that is required to pay taxes on income, assets, or transactions.

Corporation

A legal entity that is separate and distinct from its owners, who are shareholders, and it has its own rights, privileges, and liabilities independent of the owners.

Modular Homebuilder

A company that specializes in constructing homes that are primarily built off-site, in sections, and then assembled on-site.