Think Tank Company Has an Expected ROE of 26

question 2

Multiple Choice

Think Tank Company has an expected ROE of 26%. The dividend growth rate will be _______ if the firm follows a policy of plowing back 90% of earnings.

• A) 2.6%
• B) 10%
• C) 23.4%
• D) 90%

---

Definitions:

Substitute Goods

Products or services that can be used interchangeably to satisfy the same consumer need or demand, often influencing each other's demand in the market.

Reasonable Amount

A quantity or level that is considered to be fair, appropriate, or within acceptable limits based on the circumstances.

Without Unreasonable Delay

Acting or responding in a timely manner without excessive postponement.

Good Faith

The honest intent to act without taking an unfair advantage over another party, typically referenced in contracts or negotiations.