Assuming a Return on Equity Greater Than the Required Return

question 61

Multiple Choice

Assuming a return on equity greater than the required return, an increase in the dividend payout ratio will cause a(n) _____ in the sustainable growth rate.

• A) increase
• B) decrease
• C) no change
• D) decrease only if the change is temporary
• E) increase only if the change is temporary

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Definitions:

World Price

The worldwide market price of a good or service, affected by the balance of global demand and supply.

Nontariff Barrier

Measures other than tariffs that countries use to control the amount of trade across their borders, including quotas, embargoes, sanctions, and other restrictions.

Import

The act of bringing goods or services into a country from abroad for sale.

Export Restraints

Government-imposed limitations on the quantity or value of goods that can be exported from a country.