Which of the Following Statements Is False

question 32

Multiple Choice

Which of the following statements is false?

• A) From an accounting perspective, dividends generally reduce the firm's current (or accumulated) retained earnings.
• B) The way a firm chooses between paying dividends and retaining earnings is referred to as its payout policy.
• C) Most companies that pay dividends pay them semi-annually.
• D) Occasionally, a firm may pay a one-time, special dividend that is usually much larger than a regular dividend.

---

Definitions:

Diversifiable Risk

Is the type of investment risk that can be reduced through diversification of a portfolio, related to specific factors affecting individual companies or sectors.

Market Rewards

The returns or gains that investors expect to earn from their investments in the financial markets.

Non-diversifiable Risks

Risks that affect all investments across the market and cannot be mitigated through diversification.

Financial Markets

Marketplaces where individuals and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.