Which Circumstance Should NOT Influence a Firm's Dividend Policy Decision

question 71

Multiple Choice

Which circumstance should NOT influence a firm's dividend policy decision?

• A)the firm's ability to accelerate or delay investment projects
• B)a strong preference by most shareholders for current cash income versus capital gains
• C)constraints imposed by the firm's bond indenture
• D)the fact that much of the firm's equipment has been leased, rather than bought and owned

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Definitions:

Auto Insurance

A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident, covering liabilities such as injury and property damage.

Expected Utility

The anticipated satisfaction or benefit received from an outcome, weighted by the probability of different outcomes occurring.

Risk-averse

The preference to avoid risks, favoring safer outcomes over potentially higher but uncertain returns.

Probability

The likelihood or chance of an event occurring.