ABC CorpHas an ROE of 20% and a Current Dividend Payout

question 102

Multiple Choice

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

• A) A decrease in the dividend payout ratio to 35% 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% while holding ROE constant
• D) An increase in dividend payout ratio to 50% and an increase in ROE to 25%

Recognize the economic and competitive effects of mergers on industries.

Distinguish between financial and strategic motives behind mergers.

Understand the regulatory and legal frameworks governing mergers and acquisitions.

Identify factors that influence the premium paid in merger transactions.

---

Definitions:

Applied Voltage

The electric potential difference put across a device or circuit that starts the current flow.

Series Circuit

An electrical circuit in which components are connected in a linear sequence, ensuring the same current flows through all components.

Applied Voltage

The voltage that is externally applied to an electrical component or circuit, influencing its operation or behavior.

Total Resistance

The sum of all resistances in an electrical circuit, influencing the overall current flow.