16.

Abbott and Costello say that the required return on equity increases as the dividend payout ratio is decreased. Their argument is based on the assumption that

Group of answer choices

Investors are indifferent between dividends and capital gains.

Investors view dividends as being less risky than potential future capital gains.

Capital gains are taxed at a higher rate than dividends.

Investors require that the dividend yield and capital gains yield equal each other.