The dividend payout ratio, the required rate of return on common equity, and the expected growth rate of stock dividends are the major variables that affect
A) the profit margin for the S&P Industrials Index.
B) the earnings multiplier for common stock.
C) aggregate tax revenues.
D) capital gains tax revenues.
E) aggregate GDP.

Question

Quizplus · Accepted Answer

The dividend payout ratio, required rate of return on common equity, and expected growth rate of stock dividends are all factors that affect the earnings multiplier for common stock. This multiplier is used to determine the value of a company's stock and is calculated by dividing the stock price by the earnings per share. Therefore, changes in these variables can have a significant impact on the price of a company's stock. The other options listed are not directly impacted by these variables.

The Dividend Payout Ratio, the Required Rate of Return on Common