The Principle of Diminishing Marginal Utility States That Marginal Utility

question 80

Multiple Choice

The principle of diminishing marginal utility states that marginal utility:

• A) is negative.
• B) is positive.
• C) is always falling.
• D) falls after some point.

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Definitions:

Efficient Markets Hypothesis

The theory that financial markets are "efficient" in reflecting information about the prices of securities, meaning that existing share prices always incorporate and reflect all relevant information.

Residual Dividend Approach

A policy for setting dividends based on a firm's residual or leftover earnings after financing planned capital expenditures.

Dividend Clienteles

Groups of investors who prefer stocks of companies with a specific dividend policy that matches their income needs and tax situations.