Which of the Following Statements About Dividends Is False

question 326

Multiple Choice

Which of the following statements about dividends is false?

• A) Preferred stock dividends often represent a tax-advantaged investment for some corporations.
• B) Dividends paid to shareholders represent a return on the capital directly or indirectly contributed to the corporation by shareholders.
• C) The payment of dividends is at the discretion of the board of directors.
• D) The payment of dividends by the corporation is not a tax-deductible business expense.
• E) A corporation can be sued for not paying undeclared dividends.

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Definitions:

Perfectly Competitive

Refers to a market structure where there are many buyers and sellers, all producing homogenous products, with no single participant having the power to influence the market price.

Industry Supply Curve

A graphical representation showing the relationship between the price of a good and the total output of the industry for that good.

Elastic

Describes a situation where the quantity demanded or supplied changes significantly in response to a change in price.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the variable cost of producing one unit of a good or service.