Which of the Following Is True About the Payment of Dividends

question 56

Multiple Choice

Which of the following is true about the payment of dividends by a firm?

• A) Dividends are paid only to the bondholders of the firm
• B) Common stockholders have priority over preferred stockholders with regard to dividends
• C) Preferred stocks will pay accumulated dividends only once i.e. at the time of maturity
• D) Growth stocks pay little or no dividends and instead retain most of their earnings each year
• E) Common stockholders will receive a fixed amount of dividend every year

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Definitions:

Conventional

Adhering to traditional standards or norms; typical or expected within a certain context.

Ethical Dilemma

A situation in which a difficult choice has to be made between two or more actions, where none of the options resolve the ethical principles or standards at stake fully.

Kohlberg's Moral Development Theory

A theory that proposes individuals progress through different stages of moral reasoning, from basic obedience to societal rules to higher-level ethical principles.

Conventional Level

A stage in moral development proposed by Lawrence Kohlberg, where an individual's sense of morality is tied to personal and societal relationships, and compliance with laws and norms.