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:

Armored Car

A secure vehicle, often bulletproof, used for the safe transportation of valuables, such as cash and precious metals.

Corporate Responsibility

The concept that companies should be accountable for their impact on society and the environment, considering the interests of stakeholders beyond shareholders.