Which Three of the Following Factors Are Most Likely to Lead

question 12

Multiple Choice

Which three of the following factors are most likely to lead to a stable dividend policy?

• A) Signaling
• B) Dividends as a residual; the availability of positive NPV projects
• C) Mechanisms highlighted by agency theory
• D) Clientele preferences

Appreciate the importance of variance analysis for management decision-making.

Understand the basic principles of capital budgeting and its importance in investment decision-making.

Apply net present value (NPV) and internal rate of return (IRR) methods to evaluate investment opportunities.

Calculate and interpret the payback period for investments.

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Definitions:

Real Annual Wage

The annual income of an individual adjusted for inflation, providing a more accurate measure of purchasing power over time compared to nominal wages.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, which can indicate the cost of living and inflation.

Variable Input

Inputs or resources whose quantity can be changed in the short term to adjust the level of output.