Which of the Following Is (Are)false

question 61

Multiple Choice

Which of the following is (are) false?

• A) The constant dividend payout ratio policy seeks to pay a constant percentage of earnings each year.
• B) The stable dollar dividend per share policy seeks to maintain a relatively stable percentage dividend over time.
• C) The small, regular dividend plus a year-end extra policy pays a small, regular dividend plus a year-end extra dividend in good years.
• D) The constant dividend payout ratio policy will result in more variability in dividends than the stable dollar dividend per share policy.

---

Definitions:

Working Capital

The difference between a company's current assets and its current liabilities, indicating the short-term liquidity of the business.

Income Tax Rate

The proportion of earnings handed over to the government as tax.

After-Tax Discount Rate

The discount rate that takes into account the effect of taxes on the net income from an investment.

Straight-Line Depreciation

A tactic for parceling out the expense of a tangible asset through its effective duration in equal yearly quotas.