Which of the Following Are Valid Reasons for a Firm

question 22

Multiple Choice

Which of the following are valid reasons for a firm to reduce or eliminate its cash dividends?
I. The firm is on the verge of violating a bond restriction which requires a current ratio of 1.8 or higher.
II. A firm has just received a patent on a new product for which there is strong market demand and it needs the funds to bring the product to the marketplace.
III. The firm can raise new capital easily at a very low cost.
IV. The tax laws have recently changed such that dividends are taxed at an investor's marginal rate while capital gains are tax exempt.

• A) I and III only
• B) II and IV only
• C) II, III, and IV only
• D) I, II, and IV only
• E) I, II, III, and IV

---

Definitions:

Definition By Negation

Explaining the meaning of a term by stating what it is not rather than what it is.

Class Definition

A statement that specifies the characteristics, limits, and scope of a particular class or category in academic or conceptual contexts.

Synonym Definition

A method of defining a word by providing another word with a similar or identical meaning.

Anxiety Disorder

A mental health condition characterized by persistent and excessive worry, fear, or anxiousness that interferes with daily life.