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

question 68

Multiple Choice

If a firm adheres strictly to the residual dividend model,a sale of new common stock by the company would suggest that

• A) The dividend payout ratio has remained constant.
• B) The dividend payout ratio is increasing.
• C) No dividends were paid for the year.
• D) The dividend payout ratio is decreasing.
• E) The dollar amount of investments has decreased.

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Definitions:

Segments

Parts or sections into which something is divided or separated.

Chunks

Units of information grouped together to be processed or remembered as a single unit, facilitating easier recall.

Magic Number

Refers to the short-term memory capacity, traditionally considered to be 7±2 items, as postulated by psychologist George A. Miller.

Short-term Memory

The ability to keep a limited quantity of data actively accessible in one's consciousness for a brief duration.