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Using the constant-growth dividend model, the implied PE multiple equals:
A1/(k+g)
BPayout ratio divided by (k − g)
C(1 − Retention) × (k − g)
DDividend yield × Retention ratio
Answer & Solution
Correct answer: B. Payout ratio divided by (k − g)
1. Identify what the question asks: this concept maps to pemultiple (§1.1).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (B).
_Source: ICAI BoS CA Final Paper 2, Ch 4 "Security Analysis"_
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