Which of the Following Is NOT Accurate Regarding Corporate Dividends

question 110

Multiple Choice

Which of the following is NOT accurate regarding corporate dividends?

• A) Once declared, a dividend becomes a liability of the firm.
• B) The value of a firm's stock is ultimately determined by its dividend policy.
• C) The existence of an information content effect tends to make it difficult to determine the effects of dividend policy.
• D) In the absence of a more favourable tax rate on cash dividends, investors will prefer stocks with relatively low dividend payout rates.
• E) Dividend stability is usually viewed as a desirable objective.

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Definitions:

DNA Methylation

A process in which gene inactivation is perpetuated by enzymes that add methyl groups to DNA.

Heterochromatin

Highly coiled and compacted chromatin in an inactive state. Compare with euchromatin.

Transcriptionally Inactive

Referring to genes or DNA regions that are not being transcribed into RNA, often due to regulatory mechanisms.

Chromatin

The complex of DNA and proteins, primarily histones, that forms the chromosomes within the nucleus of eukaryotic cells.