Increases its dividend plowback ratio

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A firm has PVGO=0, and increases its dividend plowback ratio. All else equal you know that:

a. Earnings growth will increase, but the stock's price is not likely to increase or decrease.

b. Earnings growth will increase and the stock's price will increase.

c. Earnings growth will decrease and the stock's price will decrease.

d. Earnings growth will increase and the stock's price will decrease.

e. Earnings growth will decrease and the stock's price will increase.

Reference no: EM131321058

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