In the 1920s, Chain Stores Such as A&P Based Their

question 44

Multiple Choice

In the 1920s, chain stores such as A&P based their appeal on offering __________.

• A) unique products in each market
• B) clean, modern stores with consistent products and prices
• C) local ownership of each store
• D) a chance for customers to bargain over prices

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Definitions:

Dividend Irrelevance

Dividend irrelevance theory suggests that the dividend policy a company follows has no effect on the company’s stock price or its cost of capital.

Transaction Costs

Expenses incurred when buying or selling goods and services, which can include commissions, fees, the spread between buy/sell prices, and other related costs.

Floatation Costs

The total costs associated with a company issuing new stocks or bonds, including underwriting, legal, registration, and other expenses.

Dividend Irrelevance Theory

A theory proposed by Modigliani and Miller that suggests dividend policies do not affect a company’s capital structure or stock price in a perfect market.