Everything Else Equal, Generally a Firm Will Set a Low

question 26

Multiple Choice

Everything else equal, generally a firm will set a low dividend payout ratio and finance capital budgeting projects using retained earnings rather than through the sale of new common stock when the:

• A)flotation costs associated with a stock issue are high.
• B)senior management team wants to dilute the firm's ownership.
• C)firm faces no constraints with regard to the distribution of earnings.
• D)firm's annual earnings increase.
• E)firm has fewer acceptable capital budgeting projects than in previous years.

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Definitions:

Personal Zone

A physical space surrounding an individual that is considered personal and where intrusion by others is unwelcome, typically extending approximately 1.5 to 4 feet from the body.

Intimate Zone

The intimate zone refers to the physical space immediately surrounding an individual, typically within about 18 inches, reserved for close family and loved ones.

External Communication

Meaningful exchange of information through messages transmitted between an organization and its major audiences.

Grapevine Communication

An informal method of spreading information through social networks within an organization, not based on formal channels.