Which of the Following Are NOT Legitimate Constraints on the Dividends

question 1

Multiple Choice

Which of the following are NOT legitimate constraints on the dividends a firm will pay to shareholders?

• A)Dividends must not eat into legal capital.
• B)Bondholders may have covenants limiting the amount of the dividend.
• C)Dividends may be constrained by the amount of cash a firm has.
• D)All are legitimate constraints on the dividends that firms choose to pay to shareholders.

---

Definitions:

Geopolitical Position

The strategic importance of a country or region as influenced by geographical factors and its location in relation to other powers.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, typically measured by the rise in Gross Domestic Product (GDP).

Transnational Corporations

Large companies that operate and have assets in more than one country, making them influential global economic entities.

World Democracy

The concept of promoting democratic governance and principles at a global level, aiming for political freedom and equality across nations.