Which of the Following Is Not Necessarily True for a Firm

question 89

Multiple Choice

Which of the following is not necessarily true for a firm with a payout ratio of .15 and ROE of 20%?

• A) It reinvests 85% of its earnings back into the firm.
• B) The firm's retained earnings will increase the book value of equity by 17%.
• C) It pays a dividend of 15 cents per share.
• D) The firm's earnings and equity will grow by 17% per year.

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Definitions:

Cost to Sellers

The total expenses that a seller has to bear to produce and sell a product, including production, marketing, and distribution costs.

Increase in Demand

A situation where more consumers are willing to purchase a product at a given price, often due to changes in income, tastes, or the price of related goods.

Decrease in Demand

A decrease in demand refers to a fall in the quantity of a product that consumers are willing and able to purchase at various prices, typically leading to a downward shift in the demand curve.

Peanut-Growing South

Refers to regions in the Southern United States that are prominent in the cultivation and production of peanuts.