Palo Alto Enterprises Has $200,000 in Cash

question 20

Multiple Choice

Palo Alto Enterprises has $200,000 in cash.They wish to invest the money in Treasury bills at 5% and use the returns to pay dividends to shareholders after a year.Alternately they can pay a dividend and allow shareholders to make the investment.In perfect capital markets,which option will shareholders prefer?

• A)immediate cash dividend
• B)dividend after one year
• C)prefer half from each source
• D)indifferent between options

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Definitions:

Reinforcement

A process in psychology that increases the likelihood of a behavior by administering a reward or removing a negative outcome after the behavior occurs.

Learning Through Reinforcement

A process in behavioral psychology where the likelihood of a behavior is increased or decreased through rewards or punishments.

Imitation

The action of using someone or something as a model and copying their behaviors, actions, or characteristics.

Logic

The study of reasoning and argumentation, focusing on the principles of correct reasoning.