- CFA Exams
- CFA Level I Exam
- Study Session 10. Equity Valuation (2)
- Reading 27. Discounted Dividend Valuation
- Subject 11. Sustainable growth rate
CFA Practice Question
If the return on equity of a firm is 15 percent and the retention ratio is 40 percent, the sustainable growth rate of the firm's earnings and dividends should be:
Correct Answer: 6%
15% x 0.4 = 6%.
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