A Firm Has a Fixed Debt-To-Equity Ratio and Dividend Policy

question 35

Multiple Choice

A firm has a fixed debt-to-equity ratio and dividend policy. Assets and net income are proportional to sales, and new equity will not be issued. Which of the following statements is most correct?

• A) Almost any growth rate is theoretically possible.
• B) Only one growth rate is possible.
• C) The firm cannot grow.
• D) The firm's growth rate must be less than some maximum.

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Definitions:

Double-Blind Study

An experiment in which neither the people being studied nor the individuals running the study know who is in the control group and who is in the experimental group until after the results are tallied.

Observational Study

A research method where the researcher observes subjects in their natural environment without intervention.

Systematically Watches

The act of observing or monitoring something in a methodical and organized manner.

Affecting Subjects

Influencing participants in a study or experiment, potentially altering their behavior or responses.