(Q. 25 IN B) REINVESTING EARNINGS INTO A FIRM WILL NOT INCREASE TH...

29. (Q. 25 in B) Reinvesting earnings into a firm will not increase the stock price

unless:

A) the new paradigm of stock pricing is maintained.

B) true depreciation is less than reported depreciation.

C) the firm's dividends are growing also.

D) the ROE of new investments exceeds the firm's required rate of return.

Answer D