Which of the Following Statements Is Not Considered a Potential

question 31

Multiple Choice

Which of the following statements is not considered a potential answer to the question of why corporations pay dividends?

• A) Paying dividends avoids the double taxation of corporate income.
• B) Demanding that managers pay out dividends restricts their investment activities and forces them to adopt more efficient investment policies.
• C) Paying dividends is a source of investor goodwill.
• D) Dividends are a signal to the capital markets about the health of a corporation's activities.

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Definitions:

Declining Performance

A decrease or deterioration in the effectiveness, efficiency, or quality of an individual's or organization's output.

Existing Strategy

The current plan or course of action implemented by an organization to achieve its objectives.

Incremental Changes

Small, gradual modifications or adjustments made over time to improve a process, system, or product.

Executive Team

A group of high-level managers or directors who work together to set strategy, make major decisions, and lead an organization.