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Basic Question 0 of 4

If the return on equity of a firm is 15 percent and the retention ratio is 40 percent, the sustainable growth rate of the firm's earnings and dividends should be:

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Edward Liu

Edward Liu

Learning Outcome Statements

compare the free cash flow to the firm (FCFF) and free cash flow to equity (FCFE) approaches to valuation;

explain the ownership perspective implicit in the FCFE approach;

CFA® 2026 Level II Curriculum, Volume 4, Module 21.