Which One of the Following Is Least Apt to Limit

question 42

Multiple Choice

Which one of the following is least apt to limit the amount of cash dividends a firm can pay?

• A)Lack of retained earnings
• B)A bankruptcy proceeding
• C)A bond indenture covenant
• D)State laws
• E)Increasing stock price

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Definitions:

Face Value

The nominal or dollar value printed on a financial instrument, such as a bond or stock certificate.

Required Return

The minimum profit or yield that investors expect or require from an investment.

Interest

The cost of borrowing money or the income earned from lending money, usually expressed as a percentage of the principal.

Coupon Rate

Yearly interest earnings from a bond, shown as a percentage of its face value.