Assuming a Return on Equity Greater Than the Required Return

question 14

Multiple Choice

Assuming a return on equity greater than the required return, a decrease in the dividend payout ratio will cause a(n) _____ in the stock price.

• 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:

Sum

The total obtained by adding together a set of numbers or quantities.

Restriction

A limitation or condition that confines or restricts something's scope or action.

Quantity

The amount or number of a material or item required or available, often used in inventory management and production planning.

Constraint

A limitation or restriction in a process or system that can impact performance or outcomes.