Which of the Following Statements Is FALSE

question 26

Multiple Choice

Which of the following statements is FALSE?

• A) As firms mature, their earnings exceed their investment needs and they begin to pay dividends.
• B) Total return equals earnings multiplied by the dividend payout rate.
• C) 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).
• D) We cannot use the constant dividend growth model to value the stock of a firm with rapid or changing growth.

---

Definitions:

Goods

Physical items that satisfy human wants and provide utility, which can be bought, sold, and used.

Renewable Natural Resource

A resource that can be replenished naturally over time, such as solar energy, wind, and biomass.

Aquifers

Underground layers of water-bearing permeable rock, rock fractures, or unconsolidated materials from which groundwater can be extracted.

Coal

A combustible black or brownish-black sedimentary rock used primarily as a fuel in electricity generation.