A firm that has an ROE of 12% is considering increasing its dividend payout. The stockholders of the firm desire a dividend yield of 4% and a capital gain yield of 9%. Given this information, which of the following statements is (are) correct?

I. All else equal, the firm's growth rate will accelerate after the payout change.

II. All else equal, the firm's stock price will go up after the payout change.

III. All else equal, the firm's P/E ratio will increase after the payout change.

IV. None of the above.

Multiple Choice

A) only

B)II and III only

C)IV only

D)I and II only