A Company with a Return on Equity of 15% and a Plowback

question 39

Multiple Choice

A company with a return on equity of 15% and a plowback ratio of 60% would expect a constant-growth rate of:

• A) 4%.
• B) 9%.
• C) 21%.
• D) 25%.

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Definitions:

Personal Representative

The person designated by a testator to collect the testator’s property after he or she dies, pay the debts and taxes, and make sure the remainder of the estate gets distributed.

Beneficiaries

Individuals or entities designated to receive benefits or assets from a will, trust, insurance policy, or other legal instrument.

Undue Influence

The situation in which one person takes advantage of his or her dominant position in a relationship to unfairly persuade the other person and interfere with that person’s ability to make his or her own decision.

Testamentary Disposition

The distribution of an individual's property after death, as outlined in their will or testament.