The Residual Dividend Policy Implies That Investors Prefer to Have

question 16

Multiple Choice

The residual dividend policy implies that investors prefer to have the firm retain and reinvest earnings rather than pay them out in dividends if the rate of return the firm can earn on reinvested earnings

• A)exceeds the cost retained earnings.
• B)is less than the WACC.
• C)exceeds the cost of debt.
• D)exceeds the rate average investors can earn themselves for other investments of similar risk.
• E)is less than the rate average investors can earn themselves for other investments of similar risk.

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