The Fact That Flotation Costs Can Be Significant Is Justification

question 41

Multiple Choice

The fact that flotation costs can be significant is justification for:

• A) a firm to issue larger dividends than its closest competitors.
• B) a firm to maintain a constant dividend policy even if it frequently has to issue new shares of stock to do so.
• C) maintaining a constant dividend policy even when profits decline significantly.
• D) maintaining a high dividend policy.
• E) maintaining a low dividend policy and rarely issuing extra dividends.

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Definitions:

Standard Type

A classification or level of quality, often used as a benchmark for comparing similar items, services, or practices.

Capitalized

Describes assets or costs that are recorded as investments rather than expenses, affecting a company's balance sheet.

Tylenol

A brand name for acetaminophen, a medication used to reduce fever and relieve pain.

Restricted Delivery

A postal service option that ensures a mail or package is only delivered to the specific recipient or their authorized agent.