A Potential Downfall of Using Dividends as the Plug Item

question 53

Multiple Choice

A potential downfall of using dividends as the plug item is that:

• A)It may give shareholders mixed signals
• B)Dividends are constant within a planning horizon
• C)The firm may have to borrow cash to pay dividends
• D)Shareholders may receive an excessive return

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Definitions:

Callous

Exhibiting or having an insensitive and cruel disregard for others.

Unconcerned

Not worried, interested, or engaged; indifferent.

Evolutionary Perspective

A theoretical approach that explains human behavior and mental processes through the lens of adaptation and natural selection.

Prosocial Behaviour

Refers to voluntary actions intended to help or benefit another individual or group of individuals without expecting reward.