Which of the Following Statements Is False

question 85

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:

Permanent/Temporary

Categories of accounts in accounting where permanent accounts appear on the balance sheet and temporary accounts are closed at year's end, affecting income summary.

Normal Balance

The side (debit or credit) of an account that is increased, indicating the typical balance of that account in accordance with the double-entry bookkeeping system.

Financial Statement

Summarized reports that convey the financial status, performance, and cash flows of a business or individual over a specific period.

Permanent/Temporary

Categories that describe the expected tenure or duration of a job, position, or assignment, denoting whether it is expected to last indefinitely (permanent) or for a limited time period (temporary).