Which of the Following Statements Is Correct

question 94

Multiple Choice

Which of the following statements is correct?

• A) The optimal dividend policy is the one that satisfies the shareholders because they supply the firm's capital.
• B) The use of debt financing has no effect on earnings per share (EPS) or stock price.
• C) The riskiness of projected EPS can impact the firm's value.
• D) Stock price is dependent on the projected EPS and the use of debt but not on the timing of the earnings stream.
• E) Dividend policy is one aspect of the firm's financial policy that is determined directly by the shareholders.

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Definitions:

Self-Serving Bias

A cognitive bias where individuals attribute positive outcomes to their own actions or characteristics, and negative outcomes to external factors.

Generation Me

Refers to the cohort of people born in the late 20th and early 21st centuries, characterized by their strong sense of individualism and reliance on digital technology.

Narcissism

A psychological condition characterized by self-preoccupation, lack of empathy, and unconscious deficits in self-esteem.

Self-Serving Bias

A common tendency for individuals to attribute their successes to internal factors and their failures to external factors.