A firm's capital structure and dividend policy can affect the firm's cash position but has no impact on the market value of the firm's stock.

Question

Quizplus · Accepted Answer

A firm's capital structure and dividend policy can have a significant impact on the market value of its stock. For example, a firm that consistently pays high dividends may have a higher stock price, as investors value the reliable income stream. Additionally, a firm with a higher debt-to-equity ratio may have a higher cost of capital, which can decrease its stock price.

A Firm's Capital Structure and Dividend Policy Can Affect the Firm's