📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

  • google app store apple app store
  • âś–

      Question

      According to Walter’s Model, a firm with high return

      on investment (RoI) and low cost of capital should:
      A Distribute full profits Correct Answer Incorrect Answer
      B Follow a stable dividend policy Correct Answer Incorrect Answer
      C Retain entire earnings Correct Answer Incorrect Answer
      D Pay intermittent dividends Correct Answer Incorrect Answer

      Solution

      Walter’s model states that firms with RoI > cost of capital should reinvest earnings, as this maximizes shareholder wealth.

      Practice Next
      ask-question