If a Firm Has a Required Rate of Return Equal

question 45

Multiple Choice

If a firm has a required rate of return equal to the ROE

• A)the firm can increase market price and P/E by retaining more earnings.
• B)the firm can increase market price and P/E by increasing the growth rate.
• C)the amount of earnings retained by the firm does not affect market price or the P/E.
• D)the firm can increase market price and P/E by retaining more earnings and increasing the growth rate.
• E)None of the options