All Else the Same, If a Company Increases Its Retention

question 92

Multiple Choice

All else the same, if a company increases its retention ratio:

• A) the sustainable growth rate will increase.
• B) the stock price will increase since dividends decline.
• C) the company's cash flow will increase.
• D) the dividend yield will increase.
• E) the sustainable growth rate will decrease.

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Definitions:

Residuals

Differences between observed values and the estimated values in a statistical model, reflecting the amount of unexplained variance in the model.

Fitted Values

Estimated values predicted by a regression model, based on the observed data.

Simple Linear Regression

A statistical method that models the linear relationship between a dependent variable and one independent variable by fitting a linear equation to observed data.

SAT Exam

A standardized test widely used for college admissions in the United States, assessing reading, writing and language, and mathematics skills.