According to the Residual Theory of Dividends, If a Firm's

question 80

Multiple Choice

According to the residual theory of dividends, if a firm's equity need is less than the amount of retained earnings, the firm would ________.

• A) borrow to pay the cash dividend
• B) declare a dividend equal to the remaining balance
• C) pay no cash dividends
• D) pay dividends higher than the remaining balance to gain credibility

---

Definitions:

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony in decision-making results in an irrational or dysfunctional outcome.

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Unanimous Decision

An agreement on a course of action or decision by all parties or members involved without any dissent.

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives.