Which Statement Is Correct

question 26

Multiple Choice

Which statement is correct?

• A)Tax rates are the key determinant to a company's dividend policy.
• B)Firms are equally likely to increase or decrease their normal dividends per share.
• C)Dividends tend to be more erratic than earnings.
• D)Mature firms are less apt to pay dividends than young firms.
• E)Dividend growth tends to lag earnings growth.

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Definitions:

Inferior Good

An inferior good is one whose demand decreases as the income of the consumer increases, inversely related to income.

Price Decrease

A reduction in the cost of a good or service, which usually leads to an increase in the quantity demanded by consumers.

Allowance

An amount of money given regularly for a specific purpose, often by a parent to a child or by an employer to an employee.

Preferences

The subjective tastes and choices of consumers, which guide their decision-making in selecting among alternatives.