Which of the Following Statements Is (Are)true

question 6

Multiple Choice

Which of the following statements is (are) true?

• A) Small, rapidly-growing firms usually have excess cash and are likely to pay cash dividends.
• B) Managers of firms with free cash flow should retain the cash and invest in new projects, regardless of the projects' NPVs, as the transaction costs associated with paying dividends is too costly.
• C) Managers of firms with free cash flow should begin to pay dividends to ensure that they will not invest the free cash flow in negative-NPV projects.
• D) All of the above statements are false.