While External Funding Needs Can Be Approximated by Subtracting Cash

question 13

Multiple Choice

While external funding needs can be approximated by subtracting cash dividend payments from cash flow from operations,the decision is not simple because

• A) dividend policy is not fixed
• B) there are legal costs to raising capital externally than by retaining internal cash flow
• C) The Securities Act of 1933 only allows external capital to be raised during certain months of the year.If a firm needs funds at another time it must use internal sources.
• D) None of the above
• E) both (a)and (b)

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Definitions:

Student Body

The collective group of students enrolled at a particular educational institution.

Significant Change

A notable or considerable difference in data or results that exceeds the expectations of random variation.

P-Value

A probability that provides a measure of the evidence against the null hypothesis given by the sample. Smaller p-values indicate more evidence against H0. For a lower tail test, the p-value is the probability of obtaining a value for the test statistic as small as or smaller than that provided by the sample. For an upper tail test, the p-value is the probability of obtaining a value for the test statistic as large as or larger than that provided by the sample. For a two-tailed test, the p-value is the probability of obtaining a value for the test statistic at least as unlikely as or more unlikely than that provided by the sample.

Degrees of Freedom

The number of independent values or quantities that can be assigned to a statistical distribution or to a statistical calculation.