Which of the Following Statements Is FALSE

question 85

Multiple Choice

Which of the following statements is FALSE?

• A)A firm must balance the tax costs of holding cash with the potential benefits of having to raise external funds in the future.
• B)Paying out excess cash through dividends or share repurchases can boost the stock price by reducing managers' ability and temptation to waste resources.
• C)If there is a reasonable likelihood that future earnings will be insufficient to fund future positive-NPV investment opportunities,a firm may start accumulating cash to make up the difference.
• D)According to the managerial entrenchment theory of payout policy,managers pay out cash only when pressured to do so by the firm's investors.

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Definitions:

Framing

The way information is presented to influence perception and decision-making.

Negative First Impression

The unfavorable judgment or opinion formed about someone at the initial encounter.

Intuition

The capacity to immediately grasp something without requiring conscious thought.

High-Pitched Voice

A voice that has a high frequency or pitch, often perceived as shrill or piercing.