Managers Have Been Characterized as Reluctant to Increase Dividends If

question 70

Multiple Choice

Managers have been characterized as reluctant to increase dividends if:

• A) dividends were increased in the preceding year.
• B) earnings have permanently increased.
• C) the dividend increase cannot be sustained.
• D) the dividend payout ratio exceeds 20%.

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Definitions:

Profit-maximizing

The process of adjusting the production and sale of goods and services to achieve the highest possible profit.

Marginal Product

The additional output gained by adding one more unit of a specific input, holding all other inputs constant.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, such as labor or capital.

Variable Input

An input whose quantity can be changed in the short term by a firm to adjust the level of output.