CFA Practice Question

There are 151 practice questions for this study session.

CFA Practice Question

Haley Products has a 60 percent constant dividend payout ratio policy and current earnings of $10 per share. The firm's return on equity is 20 percent. The forecasted dividend for the next year would be closest to
A. $ 6.00 per share
B. $ 6.48 per share
C. $ 6.72 per share
Explanation: The growth rate in earnings and dividends would be (1-.6) x 20% = 8%. Current dividends are .6 x $10 = $6 per share. Next year's dividend would be 1.08 x $6 = $6.48 per share.

User Contributed Comments 2

User Comment
kalps G = r X b = gordon growth model = ROE X Retention rate
endurance kalps rules
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