An increase in ________ will increase the cost of ordinary equity.

Question

Quizplus · Accepted Answer

An increase in the expected growth rate of dividends (option A) will result in a higher expected return on equity, which increases the cost of ordinary equity. An increase in the risk-free rate (option B) will increase the required return on equity, also leading to a higher cost of ordinary equity. Therefore, both option A and B are correct. Option C, the dividend, does not directly impact the cost of ordinary equity.

An Increase in ________ Will Increase the Cost of Ordinary