Research Has Shown All of the Following to Be True

question 14

Multiple Choice

Research has shown all of the following to be true of the way corporations determine dividends except:

• A) Firms have short-run target payout ratios.
• B) Firms have long-run target payout ratios.
• C) The focus is more on dividend changes rather than absolute dividends.
• D) Managers try to avoid dividend changes that may need to be reversed.

---

Definitions:

Prudent Person Rule

A legal principle requiring that a person in charge of others' assets manage those assets with the care, diligence, and judgment that a prudent person would under similar circumstances.

Uniform Principal and Income Act

A statutory framework adopted by some states to standardize how income and principal from trusts and estates are allocated.

Extraordinary Medical Treatment

Exceptional or unusual healthcare interventions used in critical or life-threatening situations.

Testamentary Capacity

The legal and mental ability of a person to make or alter a valid will, often requiring understanding of the nature of the will, one's assets, and the identity of beneficiaries.