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:

International Trade

The exchange of goods, services, and capital between countries across international borders.

Economic Growth

An increase in the production and consumption of goods and services, reflecting an improvement in a country's economy over time, typically measured by GDP.

Tariff Rates

The taxes imposed by a government on imported or, less commonly, exported goods, often used to protect domestic industries or to generate revenue.

Import Quotas

Limits imposed by a government on the quantity or value of certain goods that can be imported into a country during a specific time.