Which of the Following Statements Regarding Profitable and Unprofitable Growth

question 33

Multiple Choice

Which of the following statements regarding profitable and unprofitable growth is FALSE?

• A)If a firm wants to increase its share price,it must cut its dividend and invest more.
• B)If the firm retains more earnings,it will be able to pay out less of those earnings,which means that the firm will have to reduce its dividend.
• C)A firm can increase its growth rate by retaining more of its earnings.
• D)Cutting the firm's dividend to increase investment will raise the stock price if,and only if,the new investments have a positive NPV.

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Definitions:

Majority Shareholder

An entity or individual that owns more than half of the shares in a company, giving them significant control over the company's decisions.

Duty

An obligation, often legal or moral, that an individual or entity is bound to fulfill towards others.

Securities And Exchange Commission

A U.S. government agency responsible for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry.

Shareholder

An individual or entity that owns shares in a corporation, thereby holding a portion of the corporation's equity and potentially having voting rights.