An Important Implication of Fisher's Separation Theorem Is That

question 25

Multiple Choice

An important implication of Fisher's separation theorem is that:

• A)while the level of investment will depend on management decisions (independent of shareholders' wishes),shareholders will have a preference for given levels of dividend.
• B)shareholders and firm management will have separate interests and directions in decisions on investment,financing and especially dividends,and these have come to be known as an agency problem.
• C)the extent to which a firm should invest can be determined by a simple rule.
• D)the extent of investment undertaken will determine the amount of finance to be raised,and whether that finance will be debt or equity.

---

Definitions:

Economic Downfall

A significant decline in the economic activity of a region or country, characterized by decreased GDP, high unemployment, and falling prices.

Monetary Losses

The reduction in financial resources, such as money, resulting from business activities, investments, or other financial transactions.

Currency Value

The worth of one currency when compared to another, which can fluctuate due to economic factors.

Cryptocurrencies

Digital or virtual currencies that use cryptography for security and operate independently of a central bank.