Lower Dividend-Payout Policies Have a __________ Impact on the Value

question 32

Multiple Choice

Lower dividend-payout policies have a __________ impact on the value of the call and a __________ impact on the value of the put compared to higher dividend-payout policies.

• A) negative; negative
• B) positive; positive
• C) positive; negative
• D) negative; positive
• E) zero; zero

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Definitions:

ΔG°

The change in Gibbs free energy under standard conditions, indicating the spontaneity of a reaction.

Entropy

A measure of disorder or randomness in a system, often associated with the second law of thermodynamics describing the direction of physical processes and energy dispersion.

Randomness

The lack of pattern or predictability in events.

System

A set of interacting or interdependent components forming an integrated whole, often within a scientific or engineering context.