If Firm B had a 75% payout ratio but then lowered it to 25%, causing its growth

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If Firm B had a 75% payout ratio but then lowered it to 25%, causing its growth rate to rise from 3% to 9%, would that action necessarily increase the price of its stock?

Why or why not?

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Fundamentals Of Financial Management

ISBN: 9780357517574

16th Edition

Authors: Eugene F. Brigham, Joel F. Houston

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Question Posted: Feb 29, 2024 09:00 AM

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If Firm B had a 75% payout ratio but then lowered it to 25%, causing its growth

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While lowering the payout ratio and increasing the retention rate the portion of earnings reinvested in the company can potentially lead to a higher s...View the full answer

Fundamentals Of Financial Management

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