The Fact That Flotation Costs Can Be Significant Is Justification

question 199

Multiple Choice

The fact that flotation costs can be significant is justification for:

• A) A firm to issue larger dividends than their closest competitors.
• B) A firm to maintain a constant dividend policy even if they frequently have to issue new shares of stock to do so.
• C) Maintaining a constant dividend policy even when profits decline significantly.
• D) Maintaining a high dividend policy.
• E) Maintaining a low dividend policy and rarely issuing extra dividends.

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Definitions:

Moral Obligation

A commitment or duty to act in a morally sound manner, often beyond legal requirements, guided by personal ethics or conscience.

Income Redistribution

The process of reallocating income through taxation, welfare policies, or other government programs to reduce income inequality.

Utilitarian Justice

A theory in ethics and economics that suggests actions should be judged as morally right if they result in the greatest good for the greatest number of people.

Distributional Justice

The philosophical and theoretical discussions and principles concerning the fair allocation of goods among members of society.