If the tax preference theory of dividend policy is correct, then

a. the required rate of return on equity, rs, will not be affected by a change in dividend policy.

b. dividend policy is irrelevant.

c. rswill increase as the payout ratio increases.

d. rswill decrease as the payout ratio increases.

e. None of the above is right.

Select one:

a.the required rate of return on equity, rs, will increase as the payout ratio increases.

b.the required rate of return on equity,rs, will decrease as the payout ratio increases.

c.the required rate of return on equity,rs, will stay the same as the payout ratio increases.