How May a Reduction in Cash Dividends Be in the Best

question 85

Multiple Choice

How may a reduction in cash dividends be in the best interests of current shareholders?

• A)dividends are taxed at twice the rate of other gains.
• B)the firm will have available cash to increase current investment and future profits.
• C)reduced dividends increase managerial compensation, thus increasing their motivation.
• D)a reduction of cash dividends cannot be in the best interests of current shareholders.

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Definitions:

Geriatric

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Fully Recover

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The practice of limiting dietary energy intake (while consuming sufficient quantities of vitamins, minerals, and other important nutrients) for the purpose of improving health and slowing down the aging process.