Discuss the Statement, "The Contingency Approach Is Just Common Sense

question 12

Essay

Discuss the statement, "The contingency approach is just common sense." Is this true? Why or why not? Why is this important for managers?

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Definitions:

Current Yield

The annual income (interest or dividends) divided by the current price of the security, often used to assess the return on investment in bonds.

Required Rate

The minimum expected rate of return by investors for providing capital to a company, often used in valuing investments.

Constant Dividend

A fixed amount of money paid to shareholders of a corporation out of its earnings on a regular basis.