The Manager of Montreal Trustco Has Noticed That as the Dividend

question 5

Multiple Choice

The manager of Montreal Trustco has noticed that as the dividend payout ratio of the firm increases the value of the firm's equity increases.This is most likely due to:

• A)The firm's return on equity is lower than the required return on equity
• B)The firm's return on equity is higher than the required return on equity
• C)The firm's return on equity is equal to the required return on equity
• D)None of the above is a likely explanation.

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Definitions:

Problem Solving

The process of identifying solutions to difficult or complex issues through analytical thought, creativity, and logical reasoning.

Distributive Justice

The principle concerned with the fair allocation of resources among diverse members of a community.

Autonomous Morality

The stage where individuals recognize the flexibility of rules and laws, basing their judgments on the intentions behind actions rather than the actions themselves.

Conventional Moral Reasoning

A level of moral development in which individuals' judgments are based on compliance with societal rules and norms, typically observed in adolescence.