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:

Intense Competition

A market condition where businesses aggressively compete for market share, customers, and resources, often leading to innovation and improved services.

Technological Change

The innovation and implementation of new technologies in a way that transforms the existing processes or products.

Environmental Uncertainty

The difficulty in predicting changes and trends in the external business environment that can impact an organization's operations.

Telecommunications

The transmission of information over distances for the purpose of communication.