Which of the Following Is TRUE of Arguments for Dividend

question 78

Multiple Choice

Which of the following is TRUE of arguments for dividend relevance?

• A)A firm's value is determined solely by the earning power and risk of its assets.
• B)Investors are generally risk averse and attach less risk to current dividends than future dividends or capital gains.
• C)The value of a firm is unaffected as it functions in a perfect market.
• D)A clientele effect exists which causes a firm's shareholders to receive the dividends that they expect.

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Definitions:

Delegate

To entrust a task or responsibility to another person, usually from someone with a higher authority to someone with a lower authority.

Universal Right

A fundamental privilege or entitlement that is believed to apply to all people regardless of nationality, status, or location.

Contract

An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law.

Assignment

The transfer of rights or property from one party to another, often seen in contracts or similar agreements.