The Payment of Dividends May Indirectly Result in Closer Monitoring

question 89

Multiple Choice

The payment of dividends may indirectly result in closer monitoring of management's investment activities,thus increasing shareholder value by

• A) reducing agency costs.
• B) increasing information asymmetry.
• C) increasing a company's amount of free cash flow.
• D) reducing auditing fees.

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Definitions:

Major Organic Product

The most significant result of an organic reaction, characterized by its prevalence and higher concentration over other products.

Wolff-Kishner Reduction

A chemical reaction used to convert carbonyl groups (C=O) into methylene (CH2) groups by treatment with hydrazine (N2H4) and a strong base.

Ketone

An organic compound characterized by a carbonyl group (C=O) bonded to two carbon atoms, common in sugars and fragrances.

Hydrazone

A compound formed by the reaction of a hydrazine with a ketone or aldehyde, characterized by a –NHN=C– linkage.