A Potential Downfall of Using Dividends as the Plug Item

question 36

Multiple Choice

A potential downfall of using dividends as the plug item is that:

• A) it may give shareholders mixed signals.
• B) dividends are constant within a planning horizon.
• C) the firm may have to borrow cash to pay dividends.
• D) shareholders may receive an excessive return.

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Definitions:

Consumer Reports

Independent, nonprofit organization that provides unbiased product ratings and reviews to help consumers make informed purchasing decisions.

Anecdotal Evidence

Evidence based on personal accounts and stories rather than hard facts or research, often considered unreliable for scientific validation.

Personal Experiences

Events or occurrences that an individual personally goes through, forming the basis of subjective perceptions and understandings.

Reference List

A list of all the sources cited in a paper or article, providing all necessary information for readers to locate each source.