Everything Else Equal, in Which of the Following Situations Will

question 8

Multiple Choice

Everything else equal, in which of the following situations will a firm generally have a high dividend-payout ratio?

• A)The existence of the impairment of capital rule.
• B)The firm's stockholders prefer capital gains rather than current income.
• C)The firm's senior management wishes to limit the number of investors who own the company's stock.
• D)The firm has excess cash after purchasing all acceptable independent capital budgeting projects.
• E)The firm's bond indentures severely restrict the amount of earnings that can be distributed each year.

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Definitions:

Length of Service

The duration of time an individual has been employed by an organization.

Probation Period

A trial period at the beginning of employment during which an employee's suitability for the position is assessed.

Pay Equity Legislation

Laws designed to eliminate discrimination in compensation and ensure equal pay for work of equal value, regardless of gender, race, or other non-merit factors.