Multiple Choice
What happens to a firm that reinvests its earnings at a rate equal to the firm's required return?
A) Its stock price will remain constant.
B) Its stock price will increase by the sustainable growth rate.
C) Its stock price will decline unless dividend payout ratio is zero.
D) Its stock price will decline unless plowback rate exceeds required return.
Correct Answer:
Verified
Correct Answer:
Verified
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