A _____ Effect Might Exist If Investors Are Attracted to Certain

question 4

Multiple Choice

A _____ effect might exist if investors are attracted to certain companies because they have particular dividend policies.

• A) residual
• B) clientele
• C) signal
• D) free cash flow
• E) relevance

---

Definitions:

Inventory

The total amount of goods or materials a company has in stock, including raw materials, work-in-progress, and finished goods.

Current Rate Method

An accounting technique used to translate the financial statements of a foreign subsidiary to the parent company's reporting currency, using the current exchange rate at the balance sheet date for assets and liabilities.

Common Stock

A type of equity security representing ownership in a corporation, with holders typically having voting rights and receiving dividends.

Historical Rate

A reference to the exchange rate used in translating foreign currency amounts into the reporting currency for financial statements at a specific past date.