In computing the cost of common equity, if D₁goes downward and P_o goes up, K_e will

Name: In computing the cost of common equity, if D 1 goes downward and P o goes up, K e will
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Question

Quizplus · Accepted Answer

In computing the cost of common equity, the cost of equity (KE) is directly proportional to the risk-free rate (DS) and the market risk premium (PS), so if D₁ goes downward and P_o goes up, KE will decrease, leading to a decrease in stock price. Therefore, K_e will also decrease, making choice B the correct answer.

In Computing the Cost of Common Equity, If D1 goes

In Computing the Cost of Common Equity, If D₁goes