A firm has a robust roe of 14 and decides to increase its


A firm has a robust ROE of 14% and decides to increase its plowback ratio. All else equal, you know that:

a. earnings growth will increase and the stock's P/E may or may not increase

b. earnings growth will increase and the stock's P/E will increase

c. earnings growth will increase and the stock's P/E will decrease

d.earnings growth will decrease and the stock's P/E will increase

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Financial Management: A firm has a robust roe of 14 and decides to increase its
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