Which of the Following Will Increase the Cost of Equity

question 85

Multiple Choice

Which of the following will increase the cost of equity?

• A) The firm's share price falls 10 percent.
• B) The firm is expected to reduce its dividend.
• C) The firm's corporate tax rate increases.
• D) None of these choices are correct.

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Definitions:

Federal Income Tax Returns

Documents filed with the IRS that report earnings, expenses, and other pertinent tax information, used to calculate federal income tax liability.

Cash Dividends

Cash disbursement from a company's income to its shareholders.

Public Company

A company that has issued securities through an initial public offering and is traded on at least one stock exchange.

Organizational Expenses

Costs incurred in the creation of a corporation or business entity, including legal fees, state incorporation fees, and promotional expenses.