Under the Walter Model, if the rate of return is greater than the cost of capital:
A. Price per share does not vary with the increase or decrease in dividend pay-out ratio.
B. Price per share increases as the dividend pay-out ratio increases.
C. Price per share increases as the dividend pay-out ratio decreases.
D. None of the above.
Answer:C
Under the Walter Model, if the rate of return is greater than the cost of capital:
A. Price per share does not vary with the increase or decrease in dividend pay-out ratio. B. Price per share increases as the dividend pay-out ratio increases. C. Price per share increases as the dividend pay-out ratio decreases. D. None of the above.