All of the Following Are Arguments for the Relevance of Dividends

question 59

Multiple Choice

All of the following are arguments for the relevance of dividends except:

• A)existence of issuance costs
• B)reduction of agency costs
• C)protection against dilution
• D)risk aversion

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Definitions:

Variable Selling

Variable selling costs are expenses that fluctuate with sales volume, such as commissions and credit card fees, which increase as sales increase.

Administrative Expense

Costs related to the general administration of a business, such as salaries of executive officers and costs of the head office.

Direct Labour

The wages or salaries paid to employees directly involved in producing goods or providing services.

Variable Manufacturing Overhead

Costs that fluctuate with the level of production output, such as utilities and supplies used in the manufacture of a product.