Which of the Following Would Cause Dividends to Decrease If

question 13

Multiple Choice

Which of the following would cause dividends to decrease if the firm was using the residual dividend model?

• A) The firm has fewer positive NPV projects.
• B) The firm's dividend payout ratio decreases.
• C) Net income decreases.
• D) All of the options would cause dividends to decrease.

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Definitions:

Spin-Off

A type of corporate restructuring where a division or subsidiary becomes an independent company.

Consignment

An arrangement in which goods are left in the possession of another party to sell, with payment to the original owner occurring only after the sale.

Wharfage

A fee charged for the use of a wharf for loading or unloading cargo, or for the temporary storage of goods on the wharf area.

Sell-Off

Transaction in which assets are sold by one firm to another.