Which of the Following Statements Is CORRECT

question 13

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm's assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm's AFN to be negative.
• B) If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm's actual AFN must, mathematically, exceed the previously calculated AFN.
• C) Higher sales usually require higher asset levels, and this leads to what we call AFN.However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio.
• D) Dividend policy does not affect the requirement for external funds based on the AFN equation.
• E) The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds.In other words, it is the growth rate at which the firm's AFN equals zero.

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Definitions:

Amygdala

A part of the brain's limbic system involved in emotion, survival instincts, and memory.

Caudate Nucleus

A part of the brain within the basal ganglia involved in various functions including motor control and learning processes.

Globus Pallidus Internal

A sub-component of the basal ganglia, involved in regulating voluntary movement.

Parkinson Disease

A neurodegenerative disorder characterized by motor symptoms such as tremor, rigidity, bradykinesia, and postural instability.