The Indifference Proposition Regarding Dividend Policy

question 38

Multiple Choice

The indifference proposition regarding dividend policy:

• A) Assumes that tax rates increase at the same rate as inflation
• B) Assumes that investors are indifferent about the timing of dividend payments
• C) States that investors are indifferent between stock dividends and cash dividends
• D) States that investors are indifferent between stock repurchase and cash dividends

Comprehend the concept and necessity of reversing entries in accounting.

Recognize the various steps in the accounting cycle, including journalizing and posting closing entries.

Understand the concept of the operating cycle and its importance to a company’s cash flow.

Differentiate between various types of liabilities and their classification on a balance sheet.

---

Definitions:

Expectations

Anticipated outcomes or beliefs about what will happen in the future.

Illusory Correlation

A cognitive bias wherein a relationship is perceived between two variables that are statistically uncorrelated or independent.

Genius

Exceptional intellectual or creative power or other natural ability.

Insanity

A legal term describing a person's inability to understand the nature of their actions, not a specific clinical diagnosis.