Which of the Following Is Correct When Considering Retained Profits

question 39

Multiple Choice

Which of the following is correct when considering retained profits as a form of financing?

• A)Financing is immediate as retained profits are already held by the company.
• B)Companies can only pay out 50% of their retained profits on dividends so there is always money available.
• C)Businesses either pay out all their retained earnings on dividends or they pay none at all.
• D)All of the above statements are correct.

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Definitions:

Peso Price

The value of a good or service expressed in pesos, the currency of various Latin American countries.

Exchange Rate Appreciation

Exchange rate appreciation refers to the increase in value of one currency relative to another, meaning you need fewer units of the appreciating currency to buy one unit of another currency.

Domestic Deflation

A decline in the general price level of goods and services within a domestic economy over a period of time.

Exports and Imports

Describes goods and services sold to other countries (exports) and goods and services purchased from other countries (imports).