Asked by
Thomas Palos
on Dec 08, 2024Verified
According to Peter Lynch, a rough rule of thumb for security analysis is that
A) the growth rate should be equal to the plowback rate.
B) the growth rate should be equal to the dividend-payout rate.
C) the growth rate should be low for emerging industries.
D) the growth rate should be equal to the P/E ratio.
E) None of the options are correct.
Plowback Rate
The percentage of profits a company retains and reinvests in its operations rather than distributing to shareholders as dividends.
Dividend-Payout Rate
This term represents the proportion of earnings a company pays its shareholders in dividends, showcasing a strategy of sharing profits.
P/E Ratio
A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if the stock is over or underpriced.
- Comprehend the Dividend Discount Model (DDM) and its utilization in analyzing investments.
Verified Answer
MF
Learning Objectives
- Comprehend the Dividend Discount Model (DDM) and its utilization in analyzing investments.