How May a Reduction in Cash Dividends Be in the Best

question 100

Multiple Choice

How may a reduction in cash dividends be in the best interests of current shareholders?

• A) A reduction of cash dividends is always in the best interests of current shareholders.
• B) The firm will have available cash to increase current investment and future profits.
• C) Reduced dividends increase managerial compensation, thus increasing their motivation.
• D) A reduction of cash dividends cannot be in the best interests of current shareholders.

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Definitions:

Forethought

Forethought is the process of thinking about and planning for future events or actions, often with the intention of achieving a specific goal.

Self Theories

Theories of late adulthood that emphasize the core self, or the search to maintain one’s integrity and identity.

Perceptions

The way in which something is regarded, understood, or interpreted by individuals.

Erik Erikson

A developmental psychologist known for his theory on psychosocial development across the lifespan.