Which of the Following Statements Is False

question 24

Multiple Choice

Which of the following statements is false?

• A) A firm must balance the tax costs of holding cash with the potential benefits of having to raise external funds in the future.
• B) Paying out excess cash through dividends or share repurchases can boost the stock price by reducing managers' ability and temptation to waste resources.
• C) If there is a reasonable likelihood that future earnings will be insufficient to fund future positive-NPV investment opportunities, a firm may start accumulating cash to make up the difference.
• D) According to the managerial entrenchment theory of payout policy, managers pay out cash only when pressured to do so by the firm's investors.

---

Definitions:

Personal Tragedy

A deeply distressing or traumatic event experienced by an individual on a personal level.

Accommodating

Showing willingness to help and adjust actions or decisions to suit others' needs or requirements.

Logical Process

A method of reasoning or a sequence of steps followed to arrive at a conclusion or solve a problem systematically.

Toxic Emotions

Negative feelings that can be harmful to an individual's mental or emotional well-being, often stemming from stress or conflict.