Which of the Following Statements Is FALSE Regarding Profitable and Unprofitable

question 7

Multiple Choice

Which of the following statements is FALSE regarding profitable and unprofitable growth?

• A)If a firm wants to increase its share price,it must cut its dividend and invest more.
• B)If the firm retains more earnings,it will be able to pay out less of those earnings,which means that the firm will have to reduce its dividend.
• C)A firm can increase its growth rate by retaining more of its earnings.
• D)Cutting the firm's dividend to increase investment will raise the stock price if,and only if,the new investments have a positive net present value (NPV).

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Definitions:

Earnings Announcement Date

The date on which a company publicly releases its financial performance results for a specific period, often accompanied by a report and sometimes a conference call with analysts and investors.

Highest and Best Use

Highest and best use is a real estate principle that values a property based on its most profitable legal use.

Fair Value

The revenue generated from liquidating an asset or the cost involved in handing off a liability within a coordinated transaction among market members at the time of gauging its value.

Conservatism

An accounting principle that advises caution, recommending that potential expenses and liabilities are recorded when probable, but revenues only when they are certain.