DrO'Connor Wants 90-Year-Old Mr

question 96

Multiple Choice

Dr.O'Connor wants 90-year-old Mr.Takashi to participate in a research study that involves moderate risks.Mr.Takashi is incapable of consenting.Which statement best expresses your advice regarding Mr.Takashi's participation in the study?

• A) He should not be allowed to participate in the study under any circumstances.
• B) He should be allowed to participate in the study regardless of the benefit.
• C) He should be allowed to participate in the study only if his participation will benefit others.
• D) He should be allowed to participate in the study only if it is likely to benefit him directly.

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Definitions:

Bird-In-The-Hand Theory

Assumes that investors value a dollar of dividends more highly than a dollar of expected capital gains because the dividend yield component, D1/P0, is less risky than the g component in the total expected return equation rs = D1/P0 + g.

Dividend Yield

A financial benchmark that illustrates the relation between a company's per annum dividend issuance and its share price.

Required Return

The expectancy of financial gain on an investment, considering its risk profile, set by investors as a benchmark.

Dividend Irrelevance Theory

A theory suggesting that dividend policy has no effect on a company's value or its stock price.