Multiple Choice
ABC Corp.has an ROE of 20% and a current dividend payout ratio of 40%.Which of the following changes will allow its earnings to grow at a 15% rate?
A) A decrease in the dividend payout ratio to 35% while holding ROE constant
B) A two-percentage-point decrease in ROE while holding dividend payout ratio constant
C) A decrease in dividend payout ratio to 25% while holding ROE constant
D) An increase in dividend payout ratio to 50% and an increase in ROE to 25%
Correct Answer:
Verified
Correct Answer:
Verified
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