For a Firm to Develop a Sensible, Useful Dividend Policy

question 4

Multiple Choice

For a firm to develop a sensible, useful dividend policy, the three things that should be considered are:

• A) dividends should not be paid if positive NPV projects are available, stock should always be issued to pay dividends, repurchases with surplus cash should be considered if positive NPV projects exist.
• B) dividends should not be paid if positive NPV projects are available, stock should always not be issued to pay dividends, repurchases with surplus cash should be considered if no positive NPV projects exist.
• C) dividends should be paid if positive NPV projects are available, stock should always be issued to pay dividends, repurchases with surplus cash should be considered if positive NPV projects exist.
• D) dividends should be paid if positive NPV projects are available, stock should always not be issued to pay dividends, repurchases with surplus cash should be considered if no positive NPV projects exist.
• E) dividends should not be paid if positive NPV projects are available, stock should always not be issued to pay dividends, repurchases with surplus cash should be considered if positive NPV projects exist.

---

Definitions:

Specialize

To concentrate on a particular area of study, work, or production, often to gain higher proficiency or efficiency.

Shirt

A shirt is a garment covering the upper body, with sleeves and typically a collar and buttons down the front, worn by both men and women.

Pie

A metaphorical representation of a total market or economy, which can be divided among participants.

Comparative Advantage

Comparative advantage is an economic principle that describes the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.