The Dividend Policy Model That Assumes That Managers Use Dividends

question 23

Multiple Choice

The dividend policy model that assumes that managers use dividends to covey positive information to shareholders is called the ...

• A) agency cost model
• B) contracting cost model
• C) signaling model
• D) none of the above

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold before deducting overheads, payroll, taxes, and interest payments.

Sales Returns

Sales Returns are transactions where customers return previously purchased merchandise, leading to a reduction in sales revenue for the seller.

Office Supplies

Items used in offices such as paper, pens, and other consumables necessary for day-to-day operations.

Departmental Income Statements

are financial statements that report the income, expenses, and net income of individual departments within a company.