The Manager of Montreal Trustco Has Noticed That as He

question 12

Multiple Choice

The manager of Montreal Trustco has noticed that as he increases the dividend payout ratio,the value of the firm's equity declines.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:

Personal Comments

Subjective remarks or observations made by an individual.

Uncomfortable

A feeling of physical or psychological distress or unease.

Inappropriate

Not suitable or proper in the context or situation.

Prevent Conflict

Methods and strategies intended to avoid disputes or disagreements before they become more serious issues.