Although Dividend Payments Reduce the Total Firm Funds to Pay

question 30

Multiple Choice

Although dividend payments reduce the total firm funds to pay bondholders the payment of dividends can reduce agency costs by:

• A) doing so on a regular schedule.
• B) sharing the dividend payments with the bondholders
• C) reducing the free cash flows to reduce the perquisite consumption.
• D) making sure that only shareholders of record receive the dividend.

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Definitions:

Percentage of Ad Spend Method

A budgeting technique for advertising in which the budget is set based on a fixed percentage of the company’s sales or projected sales, making it a simple and commonly used method for allocating advertising funds.

Competitive Parity Method

A budgeting method where a company sets its advertising and marketing budget based on the spending of its competitors.

Objective and Task Method

A budgeting method in marketing where objectives are set first, and then tasks and activities needed to achieve these objectives are determined and budgeted for.

Centralized

A system or process where control or decision-making is consolidated in a single point or location.