All Else Constant,which One of the Following Will Increase a Firm's

question 44

Multiple Choice

All else constant,which one of the following will increase a firm's cost of equity if the firm computes that cost using the security market line approach? Assume the firm currently pays an annual dividend of $1 a share and has a beta of 1.2.

• A)a reduction in the dividend amount
• B)an increase in the dividend amount
• C)a reduction in the market rate of return
• D)a reduction in the firm's beta
• E)a reduction in the risk-free rate