In General, with Regard to Dividend Payments, the Contractual Constraints

question 37

Multiple Choice

In general, with regard to dividend payments, the contractual constraints imposed by loan agreements can include all of the following EXCEPT

• A) prohibit the payment of cash dividends until a certain level of earnings has been achieved.
• B) limit the percentage of earnings that can be paid out in dividends.
• C) limit the actual dollar amount of dividends that can be paid out.
• D) require the payment of a common stock dividend.

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Definitions:

Overgrazing

The degradation of a grazing land, resulting from livestock grazing at a rate higher than the capacity of the land to regenerate.

Production Possibilities Curve

A graph that shows the combinations of two goods that can be produced using all available resources and technology efficiently.

International Specialization

The economic strategy where countries focus on the production and export of goods and services that they can produce most efficiently.

Full Employment

An economic condition where all available labor resources are being used in the most efficient way possible, typically signifying a very low unemployment rate.