A Firm Has an Earnings Retention Ratio of 40

question 29

Multiple Choice

A firm has an earnings retention ratio of 40%. The stock has a market capitalization rate of 15% and an ROE of 18%. What is the stock's P/E ratio?

• A) 12.82
• B) 7.69
• C) 8.33
• D) 9.46

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Definitions:

Spans of Control

The number of subordinates directly supervised by a manager, affecting the structure and efficiency of organizational communication and decision-making.

Adaptive Organization

An organization that is capable of adjusting its strategies, processes, and structures in response to environmental changes and new information.

Flexible Conditions

Situations or environments that can easily adapt or adjust to changing circumstances or requirements without significant disruption.

Environmental Demand

Represents the pressures and requirements placed on an organization or individual by environmental factors, including natural, social, and regulatory aspects.