If a Firm Uses the Residual Dividend Model to Set

question 63

True/False

If a firm uses the residual dividend model to set dividend policy,then dividends are determined as a residual after providing for the equity required to fund the capital budget.Under this model,the higher the firm's debt ratio,the lower its payout ratio will be,other things held constant.

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Definitions:

Reserve Army

In Marxist theory, refers to the pool of unemployed or underemployed laborers in capitalist societies, which can be used to depress wages or fill labor demands during economic peaks.

Charismatic Leadership

A leadership style based on the leader's personal charm and appeal, often inspiring devotion and enthusiasm among followers.

Relative Deprivation Theory

A sociological theory that posits individuals or groups feel deprived relative to other similar individuals or groups, leading to social discontent.

Strain Theory

A sociological theory that explains deviance and crime as a result of the disconnect between societal goals and the means available to achieve those goals.