Which One of the Following Statements Is Correct About a fiRm

question 184

Multiple Choice

Which one of the following statements is correct about a firm that adheres to a strict residual dividend policy? Assume that the amount of earnings each year exceeds the amount of capital
Spending.

• A) The dividend yield on the stock will be constant over time.
• B) The dividend payout ratio will be constant.
• C) The debt-equity ratio will increase each year by a percentage equal to [1/(1 + D/E)].
• D) The balance in the common stock account will increase each year by the amount of the capital spending multiplied by [1/(1 + D/E)].
• E) The retained earnings will increase each year by the amount of the capital spending multiplied by [1/(1 + D/E)].

---

Definitions:

Piaget's Stages

A theory that describes the cognitive development of children in four stages: Sensorimotor, Preoperational, Concrete Operational, and Formal Operational.

Concrete Operations

A stage in Piaget's theory of cognitive development where children gain the ability to think logically about concrete events and understand the concept of conservation.

Cross-Cultural Studies

Comparative research examining cultural differences and similarities across various human societies.

Task Familiarity

The extent to which an individual is accustomed to or has previously encountered a specific task, affecting their efficiency and performance.