Question

A firm that pays a dividend Select one: a. Should grow more quickly than an identical...

A firm that pays a dividend

Select one:

a. Should grow more quickly than an identical firm that pays no dividend

b.
Should grow more slowly than an identical firm that pays no dividend

c. Should grow at the same rate as an identical firm that pays no dividend

d. None of the given answers

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Answer #1

Question :

A firm that pays a dividend

Select one:

a. Should grow more quickly than an identical firm that pays no dividend

b.
Should grow more slowly than an identical firm that pays no dividend

c. Should grow at the same rate as an identical firm that pays no dividend

d. None of the given answers

Answer : a. Should grow more quickly than an identical firm that pays no dividend

Explanation :

Studies have found that high earnings growth is correlated with higher dividend rates rather than low dividend, which means that current dividend payouts have a correlation that is directly proportional to future earnings of the company

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