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:

External Locus

Refers to an external locus of control, a belief that outcomes in one's life are largely influenced by external forces or fate rather than personal actions.

Type B Personality

A personality type characterized by a relaxed, patient, and easy-going nature, often contrasted with the more competitive and high-stress Type A personality.

Type A Personality

Type A personality is characterized by high levels of competitiveness, self-imposed stress, and a constant sense of urgency.

Perceive Major Life Changes

The recognition or awareness of significant transformations in one's personal life circumstances.