The Free Cash Flow Hypothesis Supports

question 43

Multiple Choice

The free cash flow hypothesis supports

• A)decreasing stockholder dividends to retain more cash within the firm.
• B)reducing a firm's level of debt to reduce the amount of cash used to pay interest.
• C)increasing the debt portion of a firm's capital structure to increase firm value.
• D)hiring managers with little or no stock ownership in the firm.
• E)the idea that firms with high levels of free cash flow are more apt to make good acquisitions than firms with low levels.

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Definitions:

Weak Ego

Refers to an individual's fragile sense of self that has difficulty maintaining personal boundaries or coping with stressors.

Reality Principle

In psychoanalytic theory, the ability of the mind to assess the external world and act upon it accordingly, often in contrast with the pleasure principle.

Id

According to Freudian psychoanalytic theory, it is the part of the mind that contains instinctual desires and operates based on the pleasure principle.

Ego

in Freudian psychology, is the part of the personality that mediates between the instincts and the external world, aiming for a realistic approach to gratification.