- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 8. Equity Valuation: Concepts and Basic Tools
- Subject 3. Present Value Models: The Dividend Discount Model
CFA Practice Question
Which of the following will increase a company's growth rate of earnings?
B. Increasing its return on equity
C. Decreasing its retention rate
A. Increasing its dividend payout ratio
B. Increasing its return on equity
C. Decreasing its retention rate
Correct Answer: B
The growth rate can be computed as the product of ROE and 1 minus the dividend payout ratio.
User Contributed Comments 4
| User | Comment |
|---|---|
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| thekobe | g=rr*roe rr=1-dpr |
| tochiejehu | tanks guys u d bests |
| chesschh | a & c are the same, so B |