Which of the Following Statements About Dividends Is False

question 326

Multiple Choice

Which of the following statements about dividends is false?

• A) Preferred stock dividends often represent a tax-advantaged investment for some corporations.
• B) Dividends paid to shareholders represent a return on the capital directly or indirectly contributed to the corporation by shareholders.
• C) The payment of dividends is at the discretion of the board of directors.
• D) The payment of dividends by the corporation is not a tax-deductible business expense.
• E) A corporation can be sued for not paying undeclared dividends.

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Definitions:

Nominal Damages

A small amount of money awarded to a plaintiff in a lawsuit to recognize a legal right was violated, without substantial loss or damage occurring.

Trivial Damages

Refers to minimal or insignificant compensation awarded when a legal wrong has occurred, but the plaintiff has not experienced substantial harm.

Negligence Tort

A legal claim arising from injuries or damages caused by a person's carelessness or failure to take reasonable care.

Reasonable Risk

Reasonable risk involves a risk level that a prudent person would consider acceptable in order to achieve a specific benefit or goal.