The Following Facts Apply to Your Company: Based on the Residual

question 78

Multiple Choice

The following facts apply to your company: Based on the residual dividend policy, the payout ratio is 60 percent.How large (in millions of dollars) will the capital budget be?

• A) $43.2
• B) $50.0
• C) $64.8
• D) $86.4
• E) $108.0

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Definitions:

Portfolio

An assortment of financial assets including stocks, bonds, commodities, currency, and equivalents, along with closed-end funds and exchange-traded funds (ETFs).

Securities

Financial vehicles that embody a part-ownership in a corporation traded on the stock market, a credit relationship with governmental organizations or companies (bonds), or the potential ownership conferred by holding options.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, offering a return to investors.

Dividend

A portion of a company's earnings distributed to its shareholders, usually in the form of cash or additional stock.