A Firm That Has an ROE of 12% Is Considering

question 45

Multiple Choice

A firm that has an ROE of 12% is considering cutting its dividend payout. The stockholders of the firm desire a dividend yield of 4% and a capital gain yield of 9%. Given this information, which of the following statements is (are) correct?
I. All else equal, the firm's growth rate will accelerate after the payout change.
II. All else equal, the firm's stock price will go up after the payout change.
III. All else equal, the firm's P/E ratio will increase after the payout change.

• A) I only
• B) I and II only
• C) II and III only
• D) I, II, and III

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Definitions:

Elder Abuse

Harmful treatment of older adults, including physical, emotional, sexual abuse, neglect, or financial exploitation.

Social Network

Platforms and structures that facilitate the building of social relationships among people who share interests, activities, or real-life connections.

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The demographic group born during the post-World War II baby boom, approximately between 1946 and 1964.

Minorities

Groups in a society who are smaller in number and often differ from the majority in terms of race, religion, language, or cultural practices.