One Rationale for Using Expected Dividends in Valuation Is

question 4

Multiple Choice

One rationale for using expected dividends in valuation is:

• A) Dividends are a necessary payment in order for a firm to have value.
• B) Dividends are paid in cash, and cash serves as a measurable common denominator for comparing the future benefits of alternative investment opportunities.
• C) Dividends are the most reliable measure of value because most companies payout dividends to shareholders.
• D) Dividend payout ratios are set based on profitability.

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Definitions:

Benefits Principle

An economic principle that suggests that people should pay taxes based on the benefits they receive from government services.

Ability-To-Pay Principle

A taxation principle suggesting that taxes should be levied according to an individual or entity's ability to bear the tax burden, often measured by income or wealth.

First-Impression Error

A first-impression error occurs when an interviewer makes a decision too early in the interview process. This error may significantly affect a decision even when subsequent information indicates the first impression may have been wrong.

Correspondent

A journalist or reporter who contributes news or articles from a remote location, often specializing in a particular field or geographic area.