Which Statement Is Correct for a Firm That Forecasts Net

question 84

Multiple Choice

Which statement is correct for a firm that forecasts net income of $200,000 and a reduction in retained earnings of $50,000?

• A)Dividends will total $150,000
• B)The plowback ratio is 25%
• C)The payout ratio exceeds 1.0
• D)This combination of account changes cannot occur

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Definitions:

Data

Information gathered through observation, research, or analysis that can be used for making conclusions or decisions.

Behavioral Confirmation

The self-fulfilling prophecy tendency for a person to become the kind of person others expect him or her to be; also called the expectancy effect.

Expectancy Effect

The tendency for someone to become the kind of person others expect him or her to be; also known as a self-fulfilling prophecy and behavioral confirmation.

Expectancy Effect

The phenomenon where people's expectations or beliefs influence their own or others' behavior, often leading to those expectations being fulfilled.