The Manager of Montreal Trustco Has Noticed That as He

question 21

Multiple Choice

The manager of Montreal Trustco has noticed that as he increases the dividend payout ratio,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:

Gunnar Myrdal

A Swedish economist and sociologist, known for his influential study on race relations in the United States titled "An American Dilemma" (1944).

Democratic Ideals

Principles that support the belief in equality, freedom, and justice within a societal system where government is carried out by the people, either directly or through elected representatives.

Abraham Lincoln Brigade

American volunteers who fought for the Republican side against Franco's Nationalists in the Spanish Civil War, notable for comprising anti-fascist activists.

Fascism

A political ideology that advocates for authoritarian ultra-nationalism, centralized power, and dictatorial leadership, often combined with the suppression of opposition.