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Basic Question 13 of 16
The dividend growth rate for a stable firm can be estimated as ______.
B. plowback rate / the return on equity (ROE)
C. plowback rate - the return on equity (ROE)
A. plowback rate * the return on equity (ROE)
B. plowback rate / the return on equity (ROE)
C. plowback rate - the return on equity (ROE)
User Contributed Comments 9
| User | Comment |
|---|---|
| kalps | Gordon growth model |
| nchilds | plow back rate = dividend retention rate |
| 01121975 | Plow back rate refers to earnigs retained in and not to dividend retained. |
| Kuki | g = RR * ROE = Retention Rate * Return on Equity |
| DS12 | They should have mentioned plow back rate = retention rate |
| michlam14 | in the exam you are expected to know on your own that plowback=retention |
| 2014 | 1-dividend payout ratio = dividend retention rate/plow back rate |
| tochiejehu | PLOUGH BACK RATIO IS ALSO KNOWN AS RETENTION RATIO |
| praj24 | ^ why do you have to shout! :'( Plow back = rentention rate |
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Learning Outcome Statements
explain the rationale for using present value models to value equity and describe the dividend discount and free-cash-flow-to-equity models
calculate and interpret the intrinsic value of an equity security based on the Gordon (constant) growth dividend discount model or a two-stage dividend discount model, as appropriate
identify characteristics of companies for which the constant growth or a multistage dividend discount model is appropriate
explain advantages and disadvantages of each category of valuation model
CFA® 2025 Level I Curriculum, Volume 3, Module 8.