If Transaction Costs Are Significant,then Which of the Following Might

question 4

Multiple Choice

If transaction costs are significant,then which of the following might be the effect on cash dividends and share repurchases?

• A) dividends might be more likely to be paid from the investors preference argument
• B) dividends might be less likely to be paid from the firm's perspective of raising capital
• C) dividend choices are always relevant
• D) none of the above

---

Definitions:

Impression Formation Theory

Theory that explains how you develop perceptions about people and how you maintain and use those perceptions to interpret their behaviors.

Correspondence Inference Theory

A psychological theory that explains how and why people draw inferences about the dispositional attributes of others based on observed behavior and its consequences.

Self-Serving Bias

Tendency to perceive our own behavior as more positive than others’ behavior.

Fundamental Attribution Error

Error that arises from attributing another person’s behavior to internal, controllable causes rather than to external, uncontrollable causes.