Question
A firm intends to increase the dividend payout ratio from 20% to 30%. The firm uses no external financing. What happens to its Price/Earnings (P/E)
A firm intends to increase the dividend payout ratio from 20% to 30%. The firm uses no external financing.
What happens to its Price/Earnings (P/E) ratio after the increase in the payout ratio [ Select ] ["P/E ratio goes down", "P/E ratio goes up", "The effect is ambiguous", "P/E ratio does not change"] ?
Assume ROA=0.1. What happens to the firm's Price/Earnings (P/E) ratio after the increase in the payout ratio in this case [ Select ] ["P/E ratio goes down", "P/E ratio does not change", "The effect is ambiguous", "P/E ratio goes up"] ?
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Financial Management Theory And Practice
Authors: Prasanna Chandra
7th Edition
0070656657, 978-0070656659
