Which of the Following Statements Is FALSE Regarding Profitable and Unprofitable

question 1

Multiple Choice

Which of the following statements is FALSE regarding profitable and unprofitable growth?

• A) If a firm wants to increase its share price, it must diversify.
• B) If a firm retains more earnings, it will pay out less of those earnings, reducing its dividends.
• C) A firm can increase its growth rate by retaining more of its earnings.
• D) Cutting a firm's dividend to increase investment will raise the stock price if the new investment has a positive net present value (NPV).

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Definitions:

Internet Growth

The expansion and increase in usage, infrastructure, and capabilities of the internet across the world.

Collection Time

The average amount of time it takes for a business to receive payments owed by its customers after a sale has been made, indicative of a company's efficiency in collecting accounts receivable.

Short-term Securities

Securities that typically mature in one year or less, often used for investment with lower risk and short-duration goals.

Zero Balance Accounts

Bank accounts that automatically maintain a zero balance by moving funds from a master account in an amount only large enough to cover checks presented.