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:

Gamete Formation

The process of forming gametes (sex cells such as sperm and eggs) through meiosis, in which the number of chromosomes is halved to ensure genetic diversity.

XYY

Refers to a chromosomal arrangement where an individual, typically male, has an extra Y chromosome, leading to the genotype 47,XYY.

Nondisjunction

An error in cell division that results in daughter cells with an abnormal number of chromosomes, which can lead to genetic disorders.

Spermatogenesis

Production of sperm in males by the process of meiosis and maturation.