What Effect on the Growth Rate of Earnings Can Be

question 101

Multiple Choice

What effect on the growth rate of earnings can be accomplished by decreasing the dividend-payout ratio from 70% to 40% if the firm has an ROE of 20%?

• A)The growth rate can increase from 6% to 10.5%.
• B)The growth rate can increase from 6% to 12%.
• C)The growth rate can increase from 8% to 14%.
• D)The growth rate can increase from 11% to 14%. current growth rate in earnings = plowback ratio x ROE = .3 x .2 = 6%

---

Definitions:

Hate Community

A group of individuals who come together on social media or online platforms based on shared dislike or hatred towards a particular concept, individual, or group.

Negative Reference Group

A group an individual does not want to be associated with or emulate, affecting their behavior or choices.

Norms

Shared guidelines or rules within a group that dictate appropriate and expected behavior among members.

Social Agreements

Unwritten and often unspoken rules or understandings that govern the behavior of members within a society or group.