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.

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Definitions:

Labor Hours

The total number of hours worked by employees within a specific period, commonly used as a measure of labor productivity or to calculate labor costs.

Team Size

The number of members in a team, which can influence the team's dynamics, communication, and overall effectiveness.

Conformity

describes the act of matching attitudes, beliefs, and behaviors to group norms or societal standards.

Negatively Accelerating

Refers to a curve or trend where the rate of increase slows down as the variable grows, often found in contexts regarding growth and performance metrics.