The Fact That Flotation Costs Can Be Significant Is an Argument

question 89

Multiple Choice

The fact that flotation costs can be significant is an argument for:
The fact that flotation costs can be significant is an argument for:

• A) a firm to issue larger dividends than its closest competitors.
• B) a firm to maintain a constant dividend policy even if it frequently has to issue new
• C) shares.
• D) maintaining a constant dividend policy even when profits decline significantly.
• E) maintaining a high dividend policy.
• F) maintaining a low dividend policy and rarely issuing extra dividends.

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Definitions:

Elasticity Coefficient

A measure that indicates how much the quantity demanded of a good or service changes in response to a change in price.

Average Revenue

The revenue a company receives for selling one unit of a product, or the total revenue divided by the quantity of products sold.

Product Differentiation

A marketing strategy that involves distinguishing a product or service from others in the market to attract a specific target audience.

Pure Competition

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price determination by supply and demand.