Cost of Capital & Dividend Policy

What is the cost of equity using CAPM?. Risk-free rate + Beta × Market premium. Dividend / Price. Earnings / Price. Market return × Beta.

Which is NOT included in WACC calculation?. Cost of equity. Cost of debt. Market value weights. Market capitalization of debt and equity.

When a firm increases debt, WACC generally: Always increases. Always decreases. Falls initially then rises. Remains constant.

Optimal capital structure is the mix that: Minimizes WACC. Maximizes WACC. Maximizes debt. Eliminates equity.

Under MM without taxes, capital structure: Affects firm value. Does not affect firm value. Maximizes dividends. Maximizes EPS.

Dividend irrelevance theory states: Dividends reduce firm value. Dividends increase firm value. Dividend policy does not affect firm value. Higher payouts reduce risk.

Which policy produces stable dividends?. Residual dividend policy. Constant payout ratio. Constant dividend per share. Irregular dividend policy.

A higher payout ratio generally: Increases retained earnings. Decreases internal financing. Increases equity issuance. Reduces dividends.