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.

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Definitions:

Fixed Ratio Schedule

A schedule of reinforcement where a response is reinforced only after a specified number of responses.

Fixed Ratio

A schedule of reinforcement where a response is rewarded only after a specified number of responses, often used in learning and conditioning.

Gym

A facility equipped with specialized equipment for strength, cardio, and flexibility training, aimed at improving physical fitness.

Reward

A positive reinforcement given following a desired behavior, with the aim of increasing the likelihood of the behavior occurring again.