Which One of the Following Statements Concerning Cash Dividends Is

question 203

Multiple Choice

Which one of the following statements concerning cash dividends is correct?

• A) The chief financial officer of a corporation determines whether or not a dividend will be paid.
• B) A dividend is not a liability of a firm until it has been declared.
• C) If a firm has paid regular quarterly dividends in the past it is legally obligated to continue doing so.
• D) Cash dividends always reduce the common stock account balance.
• E) The dividend yield expresses the dividend amount as a percentage of the net income.

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Definitions:

Equilibrium Rate

The price or level at which supply and demand in a particular market are equal.

Usury Law

Legislation designed to regulate interest rates by setting a maximum rate that can be charged on loans and credit.

Interest Rate

The cost of borrowing money, expressed as a percentage of the amount loaned, which lenders charge borrowers or the rate earned by depositors.

Usury Laws

Legislation that sets maximum interest rates that can be charged on loans.