All of the Following Conclusions on the Importance of a Dividend

question 84

Multiple Choice

All of the following conclusions on the importance of a dividend policy are true EXCEPT

• A) as a firm's investment opportunities increase, the dividend payout ratio should decrease.
• B) the firm's expected earning power and the riskiness of these earnings are more important to the investor than the dividend policy.
• C) dividends may influence stock price by the investor's desire to minimize and/or defer taxes and from the role of dividends in minimizing agency costs.
• D) in order to avoid surprising investors, management should anticipate financing needs for the short-term, but not for the long term.

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Definitions:

Downsizing

The process of reducing the size of a company's workforce to lower costs and improve efficiency or profitability.

External Adaptation

The process through which organizations adjust and respond to changes in their external environment.

Internal Integration

The process of aligning and unifying various elements within an organization, such as departments, teams, and processes, to work cohesively towards common goals.

Cultural Symbols

Objects, signs, or emblems that carry specific meanings recognized by individuals within a particular culture or society.