ABC CorpHas an ROE of 20 Percent and a Current Dividend-Payout

question 53

Multiple Choice

ABC Corp.has an ROE of 20 percent and a current dividend-payout ratio of 40 percent.Which of the following changes will allow their earnings to grow at a 15 percent rate?

• A)A decrease in the dividend-payout ratio to 35 percent while holding ROE constant
• B)A two-percentage-point decrease in ROE while holding dividend-payout ratio constant
• C)A decrease in dividend-payout ratio to 25 percent while holding ROE constant
• D)An increase in dividend payout ratio to 50 percent and an increase in ROE to 25 percent current earnings growth rate = plowback ratio x ROE
• = )6 x .20 = 12%
• Desired earnings growth rate = plowback ratio x ROE

Distinguish between experimental and control groups.

Recognize the meaning and impact of extraneous variables on research outcomes.

Understand the importance of random assignment in experimental research.

Comprehend the advantages and limitations of the experimental research method.

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Definitions:

ANOVA Table

A statistical table used to summarize the results of an analysis of variance, showing the sources of variation and their significance.

Critical Value

A threshold in hypothesis testing, which if exceeded by the test statistic, indicates that the null hypothesis can be rejected.

Normally Distributed

A probability distribution that is symmetrical around the mean, showing that data near the mean are more frequent in occurrence.

Equal Variances

The assumption that two or more populations have the same variance.