If investors prefer firms that retain most of their earnings, then a firm that wants to maximize its share price should set a low payout ratio.

Name: If investors prefer firms that retain most of their earnings, then a firm that wants to maximize its share price should set a low payout ratio.
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Question

Quizplus · Accepted Answer

If investors prefer firms that retain earnings, they likely value reinvestment for growth over immediate dividends, suggesting a low payout ratio could maximize share price.

If Investors Prefer Firms That Retain Most of Their Earnings