Assume That Stockholders Have Exactly the Same Information as the Managers

question 34

Multiple Choice

Assume that stockholders have exactly the same information as the managers who make the financial decisions of the firm.If the managers always make rational investment decisions that is, they purchase only positive net present value capital budgeting projects which of the following dividend policies should investors prefer the managers follow? Consider everything else is equal.

• A)residual dividend
• B)constant payout ratio
• C)stable, predictable dividend
• D)low regular dividend plus extras
• E)It shouldn't matter which dividend policy the managers follow because each policy should maximize the value of the firm.

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Definitions:

Enantiomers

Mirror-image isomers of a molecule that cannot be superimposed on each other, typically affecting the molecule's interaction with biological systems.

Diastereomers

Stereoisomers that are not mirror images of each other and have different physical properties, including different melting points and boiling points.

Trichloroheptane

An organic compound that consists of a heptane backbone with three chlorine atoms attached, which can exist in several isomeric forms.

Orientation

Describes the spatial arrangement of atoms or groups in a molecule relative to one another.