Dividend Policy Is Relevant Because

question 26

Multiple Choice

Dividend policy is relevant because:

• A) shareholders apply a lower discount rate to yield a lower valuation to funds retained in the business as opposed to paid out.
• B) shareholders apply a lower discount rate to yield a higher valuation to funds retained in the business as opposed to paid out.
• C) shareholders apply a higher discount rate to yield a higher valuation to funds retained in the business as opposed to paid out.
• D) shareholders apply a higher discount rate to yield a lower valuation to funds retained in the business as opposed to paid out.

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Definitions:

Rate Of Inflation

The percentage increase in the general price level of goods and services in an economy over a period, indicating the rate at which purchasing power is eroding.

Financing

The process of providing funds for business activities, making purchases, or investing, through mechanisms like loans, credit, or investment.

AFDC

Aid to Families with Dependent Children, a former federal assistance program in the United States designed to provide financial aid to children whose families had low or no income.

Military Draft

The compulsory enlistment of individuals into the armed forces.