- 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
The dividend growth rate for a stable firm can be estimated as ______.
B. plowback rate / the return on equity (ROE)
C. plowback rate - the return on equity (ROE)
A. plowback rate * the return on equity (ROE)
B. plowback rate / the return on equity (ROE)
C. plowback rate - the return on equity (ROE)
Correct Answer: A
User Contributed Comments 9
| User | Comment |
|---|---|
| kalps | Gordon growth model |
| nchilds | plow back rate = dividend retention rate |
| 01121975 | Plow back rate refers to earnigs retained in and not to dividend retained. |
| Kuki | g = RR * ROE = Retention Rate * Return on Equity |
| DS12 | They should have mentioned plow back rate = retention rate |
| michlam14 | in the exam you are expected to know on your own that plowback=retention |
| 2014 | 1-dividend payout ratio = dividend retention rate/plow back rate |
| tochiejehu | PLOUGH BACK RATIO IS ALSO KNOWN AS RETENTION RATIO |
| praj24 | ^ why do you have to shout! :'( Plow back = rentention rate |