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.

Question

Quizplus · Accepted Answer

The Answer of 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.

The Manager of Montreal Trustco Has Noticed That as He