Palo Alto Enterprises Has $100,000 in Cash

question 16

Multiple Choice

Palo Alto Enterprises has $100,000 in cash. They wish to invest the money in Treasury bills at 6% and use the returns to pay dividends to shareholders after a year. Alternatively they can pay a dividend and allow shareholders to make the investment. In perfect capital markets, which option will shareholders prefer?

• A) immediate cash dividend
• B) dividend after one year
• C) prefer half from each source
• D) indifferent between options

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Definitions:

Performance

The efficiency and speed with which a system or process operates, often evaluated in terms of resource usage and response time.

Strong Passwords

Passwords that utilize a mix of characters, numbers, and symbols, making them difficult to guess or crack.

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The act of combining or joining two or more elements or entities to form a new, unified whole.

Back-End Database

The part of a database system that is responsible for data storage, management, and retrieval; usually accessed by front-end applications.