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

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Definitions:

Divergent Thinking

Thinking that produces many answers to the same question; characteristic of creativity.

Convergent Thinking

A cognitive process where a problem is solved by applying known rules and logic to narrow down to a single solution.

Novel

New or original, especially in relation to stories, inventions, or ideas not previously seen or experienced.

Brain Imagery

The use of various medical imaging techniques to visualize the structure and function of the brain for diagnosis and treatment planning.