When Shareholders Act on Their Own to Alter a Corporation's

question 75

Multiple Choice

When shareholders act on their own to alter a corporation's dividend policy by means of buying and selling on their own account they are creating _________.

• A) A special dividend.
• B) A regular dividend.
• C) A residual dividend.
• D) A homemade dividend.
• E) A liquidating dividend.

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Definitions:

Shut Down

A short-term decision by a firm to cease operations because current operation is not covering variable costs.

Firm

An organization that produces goods or provides services, usually with the aim of making a profit.

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Minimum Return

The lowest expected or required return on an investment over a specified period.