If a Firm Adheres Strictly to the Residual Dividend Policy,and

question 55

Multiple Choice

If a firm adheres strictly to the residual dividend policy,and if its optimal capital budget requires the use of all earnings for a given year (along with new debt according to the optimal debt/assets ratio) ,then the firm should pay

• A) the same dividend as it paid the prior year.
• B) no dividends to common stockholders.
• C) dividends only out of funds raised by the sale of new common stock.
• D) dividends only out of funds raised by borrowing money (i.e. ,issuing debt).
• E) dividends only out of funds raised by selling off fixed assets.

---

Definitions:

France

A country in Western Europe known for its rich history, cultural heritage, and significant global influence.

Performance Orientation

A focus on achieving outcomes and results, emphasizing productivity and excellence.

Individual Achievement

The successful completion of tasks or reaching of goals by a single person, often measured by personal benchmarks or external evaluations.

Valued

Considered to be important, beneficial, or of great worth within a particular context or by a particular group.