Which of the Following Is Not an Example of Market

question 22

Multiple Choice

Which of the following is not an example of market imperfections that make dividend policy relevant?

• A) Institutional restrictions on stock holdings
• B) Differences in dividend-payout ratios
• C) Transaction costs such as brokerage fees
• D) Differences among investors in marginal tax rates

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Definitions:

Sustainable Rate Of Growth

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing its debt or equity.

Profit Margin

A financial indicator that calculates how much net profit is generated for every dollar of sales by examining the relationship between a company's net income and its revenue.

Projected Addition

An estimate of future increases or expansions in inventory, assets, or capacity planned by a firm.

Current Ratio

The Current Ratio is a liquidity metric that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.