The Fact That flOtation Costs Can Be Significant Is Justification

question 30

Multiple Choice

The fact that flotation costs can be significant is justification for:

• A)a firm to issue larger dividends than its closest competitors.
• B)a firm to maintain a constant dividend policy even if it frequently has to issue new shares
• To do so.
• C)maintaining a constant dividend policy even when profits decline significantly.
• D)maintaining a high dividend policy.
• E)maintaining a low dividend policy and rarely issuing extra dividends.

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Definitions:

Profit Center

A branch or division of a business that is responsible for generating its own revenue and profit.

Department Manager

An individual responsible for overseeing the operations, budget, and personnel of a specific department within an organization.

Decentralized Business Organization

An organizational structure where decision-making and operational responsibilities are distributed among various departments or units rather than centralized in a single location or group.

Direct Operating Expenses

Costs that are directly associated with the operation of a business, such as wages and materials, but excluding overhead and capital costs.