Which of the Following Statements Is FALSE

question 85

Multiple Choice

Which of the following statements is FALSE?

• A)A firm must balance the tax costs of holding cash with the potential benefits of having to raise external funds in the future.
• B)Paying out excess cash through dividends or share repurchases can boost the stock price by reducing managers' ability and temptation to waste resources.
• C)If there is a reasonable likelihood that future earnings will be insufficient to fund future positive-NPV investment opportunities,a firm may start accumulating cash to make up the difference.
• D)According to the managerial entrenchment theory of payout policy,managers pay out cash only when pressured to do so by the firm's investors.

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Definitions:

Financial Crises

A situation where the value of financial institutions or assets drops significantly, often causing widespread economic disruption and potentially leading to a recession.

Company's Stocks

Equity investments that represent ownership shares in a corporation, giving holders a claim on part of the company's assets and earnings.

Balanced Scorecards

A strategic planning and management system used for aligning business activities to the vision and strategy of the organization, improving internal and external communications, and monitoring organizational performance against strategic goals.

Markets

Places or systems in which goods, services, and financial instruments are traded between individuals, businesses, or entities.