In a Large, Widely Held Corporation, the Financial Manager Should

question 35

Multiple Choice

In a large, widely held corporation, the financial manager should consider all of the following in establishing a dividend policy EXCEPT ____.

• A) individual shareholder preferences
• B) cash flow needs
• C) informational content of dividends
• D) investment opportunities

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Definitions:

Standard Deviation

A statistical measure that quantifies the dispersion or variability of a set of data points or investment returns around their mean (average).

Two-asset Portfolio

A portfolio comprising only two assets, used to study the principles of diversification and risk-return trade-off in finance.

Correlation Coefficient

A statistical measure that indicates the extent to which two variables change together, ranging from -1 (perfectly inverse) to +1 (perfectly direct).

Expected Rates of Return

The anticipated percentage gain or loss that an investment is predicted to generate over a given period of time, taking into account both known and estimated variables.