If management increases a firm's dividends, its growth rate will also increase.

Name: If management increases a firm's dividends, its growth rate will also increase.
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Question

If management increases a firm's dividends, its growth rate will also increase.​

Quizplus · Accepted Answer

Increasing dividends does not necessarily lead to an increase in growth rate. In fact, if a firm pays out too much of its profits in dividends, it may not have enough left for reinvestment in the business, which could hurt its future growth potential.

If Management Increases a Firm's Dividends, Its Growth Rate Will