Gagliardi Way Corporation Has an Expected ROE of 15

question 18

Multiple Choice

Gagliardi Way Corporation has an expected ROE of 15%. If it pays out 30% of its earnings as dividends, its dividend growth rate will be ________.

• A)4.5%
• B)10.5%
• C)15.0%
• D)30.0%

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Definitions:

Public Corporations

are companies whose shares are traded publicly on stock exchanges, allowing them to raise capital from public investors.

Earnings

The amount of profit that a company produces during a specific period, typically reported as net income.

Capital Gain Yield

The aspect of the total gains from an investment that derives solely from its rise in price, without accounting for dividends or interest received.

Required Rate

The minimum return an investor expects to achieve on an investment.