All of the Following Conclusions on the Importance of a Dividend

question 84

Multiple Choice

All of the following conclusions on the importance of a dividend policy are true EXCEPT

• A) as a firm's investment opportunities increase, the dividend payout ratio should decrease.
• B) the firm's expected earning power and the riskiness of these earnings are more important to the investor than the dividend policy.
• C) dividends may influence stock price by the investor's desire to minimize and/or defer taxes and from the role of dividends in minimizing agency costs.
• D) in order to avoid surprising investors, management should anticipate financing needs for the short-term, but not for the long term.

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Definitions:

Terminal Moraine

A mound or ridge of debris deposited at the end of a glacier, marking its furthest advance.

Glacier

A large, slow-moving river of ice, formed from compacted layers of snow, that shapes the landscape through its movement and melting.

U-Shaped Valley

A type of valley formed by the erosive action of glaciers, characterized by its U-shaped cross-section.

Lateral Moraine

A deposit of debris along the sides of a glacier, formed from the accumulation of material eroded from the valley walls.