Which of the Following Are Not Legitimate Constraints on the Dividends

question 71

Multiple Choice

Which of the following are not legitimate constraints on the dividends a firm will pay to shareholders?

• A)Dividends must not eat into legal capital.
• B)Bondholders may have covenants limiting the amount of the dividend.
• C)Dividends may be constrained by the amount of cash a firm has.
• D)All are legitimate constraints on the dividends that firms choose to pay to shareholders.

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Definitions:

National Labor Relations Board

An independent U.S. federal agency that enforces labor law in relation to collective bargaining and unfair labor practices.

American Federation of Labor

A national federation of labor unions in the United States, founded in 1886, representing workers' interests in various industries.

Wagner Act

A foundational piece of labor legislation in the United States that established the rights of employees to form unions and engage in collective bargaining.

Boycott

A boycott occurs when union members agree not to buy the products of a targeted employer.