Everything Else Equal, If Stockholders Prefer Current Income to Future

question 29

Multiple Choice

Everything else equal, if stockholders prefer current income to future income (i.e., capital gains) , a firm's cost of equity will:

• A)decrease if its dividend payout increases.
• B)decrease if its eliminates all dividend payments.
• C)decrease if its excess (free) cash increases.
• D)decrease if management promotes its wishes to restrict ownership in the firm.
• E)increase if debt restrictions decrease.

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