Assuming That There Are No Dividends in Arrears, How Are

question 304

Multiple Choice

Assuming that there are no dividends in arrears, how are total dividends allocated between ordinary shares and preference shares?

• A) Preference shareholders are paid their required annual dividend with the balance going to ordinary shareholders.
• B) On the basis of their relative par values.
• C) On the basis of their relative market values.
• D) Cannot be determined with the information given.

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Definitions:

Cognitive Dissonance Theory

A psychological theory suggesting that individuals experience discomfort when holding two or more contradictory beliefs, leading them to alter attitudes or behaviors.

Self-perception Theory

A theory suggesting that individuals develop their attitudes and feelings by observing their own behavior and concluding what attitudes must have caused it.

Attitude Changes

Alterations in an individual's outlook, opinions, or feelings towards various aspects of their environment or themselves, often as a result of experiences or new information.

Egoism

Giving to another person to ensure reciprocity; to gain self-esteem; to present oneself as powerful, competent, or caring; or to avoid social and self-censure for failing to live up to society’s expectations.