If a Corporation Retains All Its Profits and Distributes None

question 64

Multiple Choice

If a corporation retains all its profits and distributes none of the profit to owners, how can owners benefit?

• A)If the retained earnings are expected to create future profits, the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold.
• B)Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments.
• C)Owners will only benefit if some profits are paid out in the form of dividends.
• D)Owners will benefit by changing the board of directors.

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Definitions:

Neurons

Specific cell types in the nervous system responsible for conveying information through chemical and electrical signals.

Pedaling

The act of operating the pedals of a bicycle, exercise bike, or similar machinery, often to propel it forward or to generate power.

Parasympathetic Nervous System

Part of the autonomic nervous system responsible for rest and digest activities, counterbalancing the sympathetic nervous system.

Autonomic Nervous System

The part of the nervous system that regulates involuntary bodily functions, including heart rate, digestion, and respiratory rate.