A Change in Dividend Policy Does Not Affect the Value

question 4

Multiple Choice

A change in dividend policy does not affect the value of a share of stock as long as:

• A)the dividend payout ratio remains constant.
• B)all future dividends are changed by the same amount.
• C)all the distributable cash flow is paid out.
• D)there is an offsetting change in stock repurchases.
• E)shareholders are given ample warning.

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Definitions:

Primary Abilities

Primary abilities refer to fundamental cognitive skills in specific domains, such as verbal reasoning or spatial understanding, crucial for overall intellectual functioning.

Fluid Intelligence

The capacity to think logically and solve problems in novel situations, independent of acquired knowledge.

Accommodation

In psychology, a cognitive process that involves adjusting our existing knowledge structures in response to new experiences.

Cognitive Structures

Mental frameworks that help individuals organize and interpret information, fundamental to understanding the world and decision-making processes.