Question
How is sustainable growth linked to ROE and retention in the Gordon Growth framework?
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Answer
g=ROE× retention rate.
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Question
Why is price discovery usually better in public equity markets than in private equity?
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Answer
Public markets have continuous, transparent trading.
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Question
If a firm's P/B>1, what is the market saying about the company?
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Answer
It is valued above net assets, often for growth or intangibles.
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Question
What happens to common shareholders' dividends if the firm's profits weaken?
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Answer
Dividends can be reduced or omitted because they are discretionary.
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