Please note that these were all in one problem together just different parts.

1a. If the cost of debt is the lowest among the sources of financing, would increasing the percentage of debt in

the Capital Structure reduce the Cost of Capital to the firm?

1b. The ratio of Equity to Total Assets is very low in Banks. Why is that the case?

1c. As a stockholder would you prefer to see your company declare a 100% stock dividend or a 2-for-1 split?

Assume that either action is feasible.