The "marginal principle of retained earnings" holds that corporate investment should provide a return equal to or higher than what a stockholder could earn.

Question

Quizplus · Accepted Answer

The marginal principle of retained earnings states that the earnings retained by a company should be invested in projects that provide a return equal to or greater than the return that shareholders could earn on their own. This is to ensure that the company is making wise investment decisions and not simply hoarding profits without generating meaningful returns for shareholders.

The "Marginal Principle of Retained Earnings" Holds That Corporate Investment