Which of the Following Statements Regarding Profitable and Unprofitable Growth

question 54

Multiple Choice

Which of the following statements regarding profitable and unprofitable growth is false?

• A) If a firm wants to increase its share price, it must cut its dividend and invest more.
• B) If the firm retains more earnings, it will be able to pay out less of those earnings, which means that the firm will have to reduce its dividend.
• C) A firm can increase its growth rate by retaining more of its earnings.
• D) Cutting the firm's dividend to increase investment will raise the stock price if, and only if, the new investments have a positive NPV.

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Definitions:

Primary Types

The principal or most important categories or classes within a broader group.

Market Share

The percentage of total sales or revenue generated by a company or product in a particular market compared to its competitors.

Market Potential

The maximum total sales revenue of all providers within a specific market, assuming complete saturation and optimal selling conditions.

Sales Forecast

The quantity of products a business plans to sell during a future time period.