Which of the Following Are Valid Reasons for a Firm

question 22

Multiple Choice

Which of the following are valid reasons for a firm to reduce or eliminate its cash dividends?
I. The firm is on the verge of violating a bond restriction which requires a current ratio of 1.8 or higher.
II. A firm has just received a patent on a new product for which there is strong market demand and it needs the funds to bring the product to the marketplace.
III. The firm can raise new capital easily at a very low cost.
IV. The tax laws have recently changed such that dividends are taxed at an investor's marginal rate while capital gains are tax exempt.

• A) I and III only
• B) II and IV only
• C) II, III, and IV only
• D) I, II, and IV only
• E) I, II, III, and IV

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Definitions:

Mate Guarding Hypothesis

The theory that males guard their mates to ensure paternity certainty by preventing access by rival males.

Territories

Specific areas that are defended by animals against intruders, primarily for access to resources like food or mates.

Kirk's Dik-dik

A small antelope native to Eastern Africa known for its distinctive snout, monogamous mating behavior, and ability to live in arid conditions.

Mate Assistance Hypothesis

A theory suggesting individuals remain with a single mate to help protect and provide for offspring, thereby increasing reproductive success.