All of the Following Conclusions on the Importance of a Dividend

question 59

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:

Purchases Journal

A ledger in accounting used specifically to record all purchase transactions of a company, especially those made on credit.

Cash Payments Journal

A business ledger documenting every cash disbursement, encompassing expenditures, acquisitions of assets, and repayment of liabilities.

Special Journal

A special journal is a financial journal in accounting that is used to record and categorize specific types of transactions such as sales, purchases, cash receipts, and cash disbursements.

Special Journal

A specialized accounting journal designed to record and summarize specific types of transactions efficiently.