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:

Sprawling Gait

A mode of locomotion characterized by limbs that extend sideways from the body, commonly seen in reptiles and amphibians.

Hominin Evolution

The process of evolutionary change and diversification leading to the emergence of humans and their closest relatives, distinct from the lineage leading to modern apes.

Sahelanthropus

An extinct genus of hominids believed to be among the earliest on the human lineage, dating back approximately 7 million years ago, known from fossils found in Central Africa.

Homo Sapiens

The species name for modern humans, characterized by a capacity for language, complex problem-solving skills, and social organization.