For the past 30 years or so, the retention rate of earnings for firms in the S&P 400 has fluctuated largely between
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A. B. C. D.Explanation
Between 1977 and 1994, the retention rate has fluctuated largely between 45 and 60%, although there was a period in the early 1990s when it fell to a low of 25%.
The retention rate is used to derive the growth rate of earnings and dividends, which is used to derive the earnings multiplier.