Which of the Following Statements Is FALSE

question 19

Multiple Choice

Which of the following statements is FALSE?

• A)As firms mature,their earnings exceed their investment needs and they begin to pay dividends.
• B)Total return equals earnings multiplied by the dividend payout rate.
• C)Cutting the firm's dividend to increase investment will raise the stock price if,and only if,the new investments have a positive NPV.
• D)We cannot use the constant dividend growth model to value the stock of a firm with rapid or changing growth.

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Definitions:

Excess Burden

The cost to society created by market inefficiency, mainly used in the context of taxes that cause consumers and producers to alter their behavior in ways that reduce economic well-being.

Excess Burden

The cost to society created by market inefficiency, which occurs when goods or services are not produced or allocated efficiently.

Economic Decisions

Choices made by individuals, households, firms, or governments regarding allocation of scarce resources to satisfy various needs and desires.

Tax Revenue

Tax Revenue refers to the income that is gained by governments through taxation, which is then used to fund public services and governmental operations.