marsilni

I always use it as savago said. I think of Apple as an example, they have big growth, because they don't have dividends, compared to a company which does have dividends, apple will grow larger because they have more cash to work with, and expand with. Theres probably better examples, but Apples the first that comes to mind and helps me remember it

sgupta0827

A. Higher G will lower denominator in P= (div)/(k-g)
B. Retained earnings will increase Equity
C. No. g = RR*ROE
D. Yes g=RR*ROE

MonkeyBusiness

Hi you guys..

I see you're talking about A possibly being correct - that is the "dummy choice" for this question..

because stock price has nothing to do with financials of the company... the stock price is simply the price that the stock is trading for in the market and can be independent of financials... in other words - retained earnings does not have a direct (it does have an indirect) effect on the price of a stock -- the payout ratio is not the same as the price of the stock either