Question: Explain what the first two sentences in this excerpt mean: What is the connection between the relative prices of these two types of firms and
Explain what the first two sentences in this excerpt mean: What is the connection between the relative prices of these two types of firms and their cost of raising capital?
A
Growth stocks had a higher pricetoearnings ratio than value stocks. The cost of raising new capital falls with an increase in the stock price.
B
Growth stocks had a higher dividend payout ratio than value stocks. The cost of raising new capital falls with an increase in the stock price.
C
Growth stocks had a higher book value than market value. Increasing of book value, rather than market make less difficult to attract new capital.
D
There is no connection between the relative prices of these two types of firms and their cost of raising capital.
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