Which of the Following Statements Is Not Considered a Potential

question 62

Multiple Choice

Which of the following statements is not considered a potential answer to the question of why corporations pay dividends?

• A) Paying dividends avoids the double taxation of corporate income.
• B) Dividends are a signal to the capital markets about the health of a corporation's activities.
• C) Paying dividends is a source of investor goodwill.
• D) Demanding that managers pay out dividends restricts their investment activities and forces them to adopt more efficient investment policies.

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Definitions:

Economic Profit

The net gain of a company after deducting both its explicit and implicit expenditures from its aggregate revenue.

Monopolistic Competitor

a firm that operates in a market with many competitors, each offering a product that is similar but not identical.

Minimum ATC

The lowest point on the Average Total Cost curve, indicating the most efficient scale of production for minimizing costs.

Monopolistic Competitors

Firms operating in a market structure characterized by a high number of sellers offering differentiated products.