A Firm That Follows a Residual Distribution Policy Must Believe

question 39

True/False

A firm that follows a residual distribution policy must believe that the dividend irrelevance theory is correct.

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Definitions:

Essential Terms

The necessary and fundamental conditions included in a contract that are critical to its enforcement and validity.

Unenforceable

Refers to a contract or clause that, due to legal deficiencies, cannot be executed by a court.

Enforceable Contract

A binding legal agreement between two or more parties that is recognized by the law and has elements of offer, acceptance, consideration, and mutual consent.

Party Against Enforcement

The individual or entity against whom the application of a law, regulation, or contract is sought to be enforced.