If a Firm Adheres Strictly to the Residual Dividend Model,then

question 49

Multiple Choice

If a firm adheres strictly to the residual dividend model,then if its optimal capital budget requires the use of all earnings for that year (along with new debt according to the optimal debt/total assets ratio) ,the firm should pay

• A) No dividends except out of past retained earnings.
• B) No dividends to common stockholders.
• C) Dividends,in effect,out of a new issue of common stock.
• D) Dividends by borrowing the money (debt).
• E) Either c or d above could be used.

---

Definitions:

DHCP

Dynamic Host Configuration Protocol, a network management protocol used to automate the process of configuring devices on IP networks, enabling them to use the TCP/IP protocol based communications.

Flash Storage Devices

Solid state storage media that use flash memory to retain data, offering fast access speeds and resistance to physical shock.

Micro-SD

A compact, portable flash memory card used primarily for storage in mobile devices, such as smartphones and digital cameras.

Mini-SD

A smaller version of the Secure Digital (SD) memory card format, typically used in portable electronic devices like digital cameras and mobile phones for extended storage.