The cost of equity is affected by dividend increases or decreases.

Name: The cost of equity is affected by dividend increases or decreases.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The cost of equity can be affected by dividend increases or decreases because dividends are a component of the return that equity investors expect, and changes in dividend policy can signal management's expectations about future earnings, thereby influencing investors' required rate of return.

The Cost of Equity Is Affected by Dividend Increases or Decreases