A Firm Increases Its Dividend Plowback Ratio

A firm increases its dividend plowback ratio. All else equal you know that ________.

A) earnings growth will increase and the share's P/E will increase
B) earnings growth will decrease and the share's P/E will increase
C) earnings growth will increase and the share's P/E will decrease
D) earnings growth will increase and the share's P/E may or may not increase

Correct Answer:

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