All Else Constant, Which One of the Following Will Increase

Multiple Choice

All else constant, which one of the following will increase a company's cost of equity if the company computes that cost using the security market line approach? Assume the firm currently pays an annual dividend of $1 a share and has a beta of 1.2.

A) A reduction in the dividend amount
B) An increase in the dividend amount
C) A reduction in the market rate of return
D) A reduction in the firm's beta
E) A reduction in the risk-free rate