Which of the Following Statements Is Correct

question 37

Multiple Choice

Which of the following statements is correct?

• A)Current Canadian tax law encourages companies to pay dividends rather than retain earnings.
• B)If a company uses the residual dividend model to determine its dividend payments, dividend payouts will tend to increase whenever the company's profitable investment opportunities increase.
• C)The stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the residual dividend model.
• D)Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk.

Recognize the impact of foreign exchange rates on business transactions and financial reporting.

Identify and account for transactions related to available-for-sale and held-to-maturity securities.

Differentiate between short-term and long-term investments and their respective accounting treatments.

Interpret financial ratios and their implications for a company's financial performance.

---

Definitions:

Budgeting

The process of creating a financial plan to manage revenues, expenses, and resources over a specified period, often projecting future income and expenditures.

Financial Terms

The specific language or jargon used within the finance industry to describe actions, instruments, processes, and concepts related to money and finance.

Preparing A Budget

The process of creating a financial plan that forecasts the revenues and expenses over a specified period, typically a year.

Budget Goals

Financial targets that an organization aims to achieve within a specific period to manage resources effectively.