Explain the theories of high dividend distributions vs low and price-earnings ratios
The homework problem reads as this. State whether you would expect them to distribute a relatively high or low proportion of current earnings and whether you would expect them to have a relatively high or low price-earnings ratio.
a. High-risk companies.
b. Companies that have recently experienced a temporary decline in profits.
c. Companies that expect to experience a decline in profits.
d. "Growth" companies with valuable future investment opportunities.
Could you please explain if I am correct in my assumptions and if they are not correct, why?:
a. high proportion and high PE
b. low disbursement and high PE
c. low disbursement and high PE
d. low disbursement and high PE