The Ability of Shareholders to Undo the Dividend Policy of the Firm

question 64

Multiple Choice

The ability of shareholders to undo the dividend policy of the firm and create an alternative dividend payment policy via reinvesting dividends or selling shares of stock is called (a) :

• A) perfect foresight model.
• B) MM Proposition I.
• C) capital structure irrelevancy.
• D) homemade leverage.
• E) homemade dividends.

---

Definitions:

Stereotype

A set of simplistic, rigidly held, overgeneralized beliefs about a particular type of individual or group of people, an idea, and so on.

Factual Statement

A statement that can be proven true or false, based on objective evidence.

Value Judgment

An evaluation as “good” or “bad” based on moral or ethical standards rather than objective ones.

Bias

A personal leaning or inclination.