Companies growing faster tend to have lower target payout


1. Assume that 15% of a certain type of bonds default during Year 1, 5% default during Year 2, 8% default during Year 3, and 8% default during year 4. What is the conditional probability of default during Year 3?

2. What is the dividend yield on a stock that is currently trading at $125 per share and is expected to pay a dividend of $4.375?

3. Companies growing faster tend to have lower target payout ratios.” Explain what is meant by this statement. Why do you think it is so?

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Financial Management: Companies growing faster tend to have lower target payout
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