- 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
If a company's dividend payout ratio is 20%, then its retention rate is ______.
B. 80%
C. 25%
A. 5 times
B. 80%
C. 25%
Correct Answer: B
The retention rate is computed as 1 minus the dividend payout ratio.
User Contributed Comments 9
| User | Comment |
|---|---|
| Done | If you get this one wrong you have issues |
| Nikita | I almost did, was thinking too much ha. |
| Masterkang | What is there to think about? |
| eb2568 | Now that is my kind of question! |
| tochiejehu | easy one dear |
| praj24 | Snap! kept thinking it's too good to be true :P |
| nabada0419 | Retention Ratio = (NI - Div)/ NI = 1 - Div Payout Ratio |
| Inaganti6 | Don't show up at the exam if you got this wrong. |
| MathLoser | I have tissue |