When a Firm Either Charges Less Than Its Costs or Less

question 24

Multiple Choice

When a firm either charges less than its costs or less than it charges in its home market, the situation is called:

• A) transferring.
• B) off- pricing.
• C) cost- less.
• D) dumping.
• E) discounting.

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Definitions:

Payout Ratio

The proportion of earnings paid out as dividends to shareholders, often expressed as a percentage.

Dividend Policies

The policies and guidelines a company follows in deciding how much of its earnings it will pay out to shareholders as dividends.

Bird-In-The Hand

A theory suggesting that investors prefer dividends from a stock to potential capital gains because of the immediate certainty of receiving payouts.

Dividend Reinvestment Plans

Programs that allow shareholders to automatically reinvest their cash dividends into additional shares of the issuing company.