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Question 20 5 pt Your friend, a financial analyst, believes that the required return on equity increases as the dividend payout ratio is decreased. Their
Question 20 5 pt Your friend, a financial analyst, believes that the required return on equity increases as the dividend payout ratio is decreased. Their argument is based on the assumption that investors view dividends as being less risky than potential future capital gains capital gains are taxed at a higher rate than dividends investors require the dividend vield and capital gains yield to be equal to each other investors value a dollar of expected capital gains more highly than a dollar of expected dividends because of the lower tax rate on capital gains
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