- CFA Exams
- CFA Level I Exam
- Topic 4. Corporate Issuers
- Learning Module 18. Analysis of Dividends and Share Repurchases
- Subject 5. Payout policies
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 |