The Residual Dividend Approach Is Based on the Premise That

question 357

Multiple Choice

The residual dividend approach is based on the premise that:

• A) The sale of new equity is a desirable alternative to altering dividend payout.
• B) Maintaining a predictable dividend payout is not a primary objective.
• C) Dividends on preferred stock must be paid first with common shareholders getting what's leftover; that is, the residual.
• D) A clientele effect exists.
• E) A firm's investment needs are of secondary concern to its dividend policy.

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Definitions:

Outsourcing Vendor

A third-party company that provides services or performs tasks that a company might otherwise have done in-house, often to save costs or access specialized expertise.

Insourcing

The practice of using an organization's internal resources to complete tasks or projects that could be outsourced to external providers.

Outsourcing

The business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees.

Offshoring

Moving production outside the home country.