Question: True & False - When a firm is all equity financed, its weighted average cost of capital is the same as its cost of equity.

True & False

- When a firm is all equity financed, its weighted average cost of capital is the same as its cost of equity.

- Diversification is usually easier for firms than stockholders

- Residual dividend theory ("flotation cost") sugggests dividends should be paid to stockholders first, and then what is left can be reinvested in the firm's projects.

- Under the ideal ocnditions of perfect capital markets, a firm's dividen policy would have no effect upon its stock prices.

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