New Orleans Builders Inc

question 47

Multiple Choice

New Orleans Builders Inc.has the following data.If it follows the residual dividend model,what is its forecasted dividend payout ratio? ​

• A) 46.80%
• B) 30.00%
• C) 43.20%
• D) 32.00%
• E) 40.00%

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Definitions:

Beta Coefficient

A gauge for assessing the risk or fluctuation level of a security or portfolio in relation to the entire market.

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, typically represented by government bonds.

Market Risk Premium

The surplus earnings expected by investors for possessing a market portfolio with risks as opposed to secure, riskless assets.

CAPM

Capital Asset Pricing Model, a formula that describes the relationship between the expected return of an investment and its risk.