The Residual Dividend Approach Is Based on the Premise That

question 89

Multiple Choice

The residual dividend approach is based on the premise that:

• A) The sale of new equity is a desirable alternative to altering dividend payout.
• B) Maintaining a predictable dividend payout is not a primary objective.
• C) Dividends on preferred stock must be paid first with common shareholders getting what's leftover; that is, the residual.
• D) A clientele effect exists.
• E) A firm's investment needs are of secondary concern to its dividend policy.

---

Definitions:

Hydromechanical Transmission

A type of power transmission system that combines hydraulic and mechanical components to transfer power from the engine to the wheels or other machinery.

Power Take-off

A device that transfers mechanical power from a power source, like an engine, to auxiliary equipment or tools not directly powered by the engine itself.

Allison

Allison is known for creating automatic transmissions for commercial vehicles, offering products that enhance vehicle performance and control.

Planetary Gearset

A system of gears consisting of a central 'sun' gear, several 'planet' gears, and a 'ring' gear, used to provide various gear ratios in transmissions.