Several Factors Will Be Considered by the Board of Directors

question 150

Multiple Choice

Several factors will be considered by the board of directors and management as they consider the level of dividend payout.Some of these factors include:

• A)the ability of the firm to generate cash to sustain the level of dividends.
• B)legal and contractual considerations
• C)growth opportunities
• D)cost of other financing sources
• E)all of the above

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Definitions:

Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Call Option

An economic agreement that provides the bearer the option, without the necessity, to purchase a share, bond, commodity, or different asset at an agreed-upon price during a determined timeframe.

Derivative Security

A financial security whose value is determined by or derived from an underlying asset or group of assets, such as stocks, bonds, commodities, or market indices.