Which of the Following Would Cause Dividends to Decrease If

question 4

Multiple Choice

Which of the following would cause dividends to decrease if the firm was using the residual dividend model?

• A)The firm has more positive NPV projects.
• B)The firm's dividend payout ratio decreases.
• C)The firm's average collection period increases.
• D)All of these would cause dividends to decrease.

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Definitions:

Cournot Equilibrium

A concept in economic theory where firms reach a state in which each firm chooses the optimal output level assuming the output levels of the other firms.

Duopoly

A market structure characterized by two producers/sellers in competition with each other.

Constant Costs

Costs that remain unchanged regardless of the level of output or activity within a certain range.

Corncob Pipes

Pipes made from the dried cob of a corn plant, often used for smoking tobacco.