A Valid Reason for a fiRm to Reduce or Eliminate

question 235

True/False

A valid reason for a firm to reduce or eliminate its cash dividends is if the firm can raise new capital
easily at a very low cost.

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Definitions:

ERISA

The Employee Retirement Income Security Act of 1974, a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to protect individuals in these plans.

Minimum Funding Requirements

Regulated benchmarks that pension plans or other forms of retirement funds must reach to ensure they have sufficient assets to meet future obligations.

Plan Assets

Investments and other assets held by a pension or retirement plan to fund the benefits promised to participants.

GAAP

Generally Accepted Accounting Principles, a common set of accounting principles, standards, and procedures under which financial statements are prepared, applicable within a specific jurisdiction or country.