Which One of the Following Is NOT a Reasonable Option

question 161

Multiple Choice

Which one of the following is NOT a reasonable option for deploying a diversified company's financial resources?

• A) Making acquisitions to establish positions in new businesses or to complement existing businesses.
• B) Investing financial resources in cash cow businesses until they show enough strength to generate positive cash flows.
• C) Funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses.
• D) Paying down existing debt,increasing dividends,or repurchasing shares of the company's stock.
• E) Investing in ways to strengthen or grow existing businesses.

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with fixed dividends.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, increasing the number of shares owned by shareholders.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Contributed Capital

Funds raised by a company in exchange for its shares, representing the equity capital contributed by the shareholders.