The Management Team of SoftWare Dreamworks Ltd

question 33

Multiple Choice

The management team of SoftWare Dreamworks Ltd. owns 35% of the outstanding shares of the company. the remainder are widely held by North American investors, with no on else owning more than 2% of the shares. However management is concerned about retaining control because there has been much takeover activity in the software industry recently. The firm's debt-Equity ratio sits at 60%. The current dividend payout ratio is 5%. How should management plan to obtain new funds for expansion into 4D research and development?

• A) Issue new common shares.
• B) Sell new bonds.
• C) Issue new preferred shares.
• D) Borrow long term from a bank.
• E) Keep a high profit retention policy.

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Definitions:

Ancestry

The lineage or genetic heritage of an individual or species, tracing back through generations.

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Short-Sighted Evolution

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