An Increase in Flotation Costs Will Most Likely Result in Which

question 153

Multiple Choice

An increase in flotation costs will most likely result in which of the following?

• A) smaller dividend payments so that less external equity financing is needed
• B) larger dividend payments so shareholders are able to earn their required returns
• C) larger dividend payments to offset higher taxes paid by investors
• D) no change in dividend policies because flotation costs are paid by purchasers of common stock

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Definitions:

ECT

Electroconvulsive Therapy, a psychiatric treatment in which seizures are electrically induced in patients to provide relief from mental disorders.

Severe Depression

Severe depression is a mental health condition characterized by persistent feelings of sadness, hopelessness, and loss of interest in activities, significantly impacting daily functioning and quality of life.

Haldol

A medication commonly used to treat psychotic disorders, including schizophrenia, characterized by its antipsychotic properties.

Depression

A common and serious mood disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, affecting daily functioning.