Bubba Gumm Company Has an Expected ROE of 9

question 27

Multiple Choice

Bubba Gumm Company has an expected ROE of 9%. The dividend growth rate will be _______ if the firm follows a policy of plowing back 10% of earnings.

• A) 90%
• B) 10%
• C) 9%
• D) 0.9%

---

Definitions:

Total Rate Of Return

The comprehensive measure of investment performance, combining both capital gains and interest or dividends, over a specific period.

Par Value

The face value of a bond or stock, as stated by the issuing company, which might not reflect its market value.

Callable

A feature of a financial instrument that allows the issuer to repurchase or redeem the instrument before its maturity date.

Yield To Call

The total return anticipated on a bond if it is held until the date it is called by the issuer, including interest payments and the call price.