Cash Dividends Send Which Two of the Following Signals to the Market

question 52

Multiple Choice

Cash dividends send which two of the following signals to the market?
I.Agency costs will be lowered since less cash will be held by the firm.
II.The firm is planning on downsizing.
III.The firm is currently,and expects to continue to be,profitable.
IV.The firm will no longer conduct stock repurchases.

• A)I and II only
• B)II and III only
• C)III and IV only
• D)II and IV only
• E)I and III only

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Definitions:

Summary Report

A summary report compiles and summarizes the key points and findings from detailed reports, providing an overview of the presented data.

Decentralization

The distribution of decision-making powers and authority away from a central location or authority to local or individual actors.

Authority

The legal or rightful power or right to make decisions, give orders, and enforce rules within a particular scope or role.

Operating Decisions

Choices made by management regarding the day-to-day operations of a business, such as pricing, inventory management, and employment levels.