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NEW QUESTION: 1
When comparing two companies, if all else is equal, the entity that has a higher dividend payout ratio will have a:
A. Higher price to earnings ratio.
B. Higher investment opportunity schedule.
C. Lower debt ratio.
D. Higher marginal cost of capital.
Answer: D
Explanation:
The higher the dividend payout ratio, the sooner retained earnings are exhausted and the entity must seek more costly, outside equity financing. This drives the marginal cost of capital.

NEW QUESTION: 2

A. Option A
B. Option B
C. Option D
D. Option C
Answer: A

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