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:

3-Phenylpentan-3-ol

An organic compound characterized by a five-carbon chain with a phenyl group attached to the third carbon and an alcohol group on the same carbon.

Benzoic Acid

A simple aromatic carboxylic acid, its salts are used as food preservatives.

Propanoyl Chloride

An acyl chloride derived from propanoic acid, used in organic synthesis to introduce the propanoyl functional group.

Organic Product

A compound or material derived from living organisms, structured primarily around carbon chains or rings.