Dividend Policy Is a Trade-Off Between ___________ and ___________

question 114

Multiple Choice

Dividend policy is a trade-off between ___________ and ___________.

• A)Retained earnings; borrowing
• B)Capital budgeting; capital structure
• C)Retained earnings; issuing stock
• D)Declaring stock splits; stock dividends

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Definitions:

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action or the benefits you miss out on when choosing one alternative over another.

Economic Welfare

The overall health and well-being of an economy, often measured by standards of living, availability of goods and services, and income distribution.

Economic Efficiency

A state in which resources are ideally distributed to best meet the needs of every person or entity, reducing waste and inefficiency to a minimum.

Gains From Trade

The benefits that parties obtain from engaging in voluntary exchange of goods or services.