Which of the Following Are Valid Reasons for a Firm

question 22

Multiple Choice

Which of the following are valid reasons for a firm to reduce or eliminate its cash dividends?
I. The firm is on the verge of violating a bond restriction which requires a current ratio of 1.8 or higher.
II. A firm has just received a patent on a new product for which there is strong market demand and it needs the funds to bring the product to the marketplace.
III. The firm can raise new capital easily at a very low cost.
IV. The tax laws have recently changed such that dividends are taxed at an investor's marginal rate while capital gains are tax exempt.

• A) I and III only
• B) II and IV only
• C) II, III, and IV only
• D) I, II, and IV only
• E) I, II, III, and IV

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Definitions:

Mental Illness

A variety of psychological disorders characterized by their impact on an individual's emotions, cognition, and actions.

Release of Information

Release of Information is a process in healthcare or other industries that involves the authorized sharing of confidential or protected information with third parties.

Command Hallucinations

Auditory hallucinations where the individual hears voices commanding them to perform actions, sometimes dangerous, associated with certain psychiatric disorders.

Seclusion

Seclusion is the practice of isolating individuals from others, typically for the purpose of calming or reducing risk of harm to themselves or others, often used in psychiatric settings.