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Multiple choice

According to Walter's model, a firm should have 10% dividend pay out ratio when r > k.

  1. True

  2. False

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to Walter's model, when r > k (growth firm), the firm should retain earnings to reinvest at a higher rate, meaning it should have a 0% dividend payout ratio, not 10%.

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