The Dividend Irrelevance Hypothesis Is Based on All of the Following

question 116

Multiple Choice

The dividend irrelevance hypothesis is based on all of the following assumptions EXCEPT

• A) investment decisions will not be altered by the amount of dividend payments.
• B) investors do not need cash dividends to supplement their current income.
• C) perfect capital markets.
• D) borrowing decisions will not be altered by the amount of dividend payments.

---

Definitions:

Accounts Receivable

The amount customers are required to pay to a company for already delivered services or products.

FOB Shipping Point

A term used in shipping agreements indicating the buyer is responsible for the goods and shipping costs as soon as they leave the seller's premises.

Perpetual System

An inventory accounting system that records inventory purchases and sales in real-time, providing a continuous record of inventory levels.

Freight Costs

Freight Costs entail the charges incurred for the transportation of goods by land, sea, or air.