If a Firm Adheres Strictly to the Residual Dividend Model,then

question 49

Multiple Choice

If a firm adheres strictly to the residual dividend model,then if its optimal capital budget requires the use of all earnings for that year (along with new debt according to the optimal debt/total assets ratio) ,the firm should pay

• A) No dividends except out of past retained earnings.
• B) No dividends to common stockholders.
• C) Dividends,in effect,out of a new issue of common stock.
• D) Dividends by borrowing the money (debt).
• E) Either c or d above could be used.

---

Definitions:

Vendor

An individual or company that sells goods or services to individuals, businesses, or governmental entities.

Cloud Computing

Offering a range of services via the internet, including but not limited to data storage, servers, databases, networking, and software.

Centralized Location

A singular, specific location where operations, processes, or functions are concentrated, often to streamline management and coordination.

As-A-Service

A business model where products, software, or services are provided to customers through the internet, typically on a subscription basis.