Absorb the risk by plowing back the capital surplus

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Reference no: EM13725437

If a firm that CANNOT issue new equity grows at a rate higher than SGR, which of the following MUST be true?

They can absorb the risk by plowing back the Capital Surplus

Trick question: a firm cannot grow at a rate higher than SGR

Unless the plowback ratio is increased, the firm's debt ratio will increase

The firm MUST pay out all of its earnings

Reference no: EM13725437

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