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ENGR 111 > Ch 9: Stock Valuation > Flashcards

Ch 9: Stock Valuation Flashcards

1
Q

How do you find a firm’s growth rate?

A

g = retention ratio * return on retained earnings

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2
Q

What will an increase in the retention rate do?

A
  • reduce dividend paid to shareholders

- increase the firm’s growth rate

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3
Q

How is a firms PE ratio related to growth and risk?

A

positively related to growth, negatively related to risk

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ENGR 111 (8 decks)

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