Which One of the Following Statements Related to Dividend Policy

question 67

Multiple Choice

Which one of the following statements related to dividend policy is correct?

• A)The primary question related to dividend policy is whether or not a firm should ever pay a dividend.
• B)Both dividends and dividend policy are irrelevant.
• C)Dividend policy focuses on the timing of dividend payments.
• D)Homemade dividends increase the importance of a firm's dividend policy decisions.
• E)Whether or not a firm ever pays a dividend is irrelevant to equity valuation.

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Definitions:

Monetary Benefit

Financial gains obtained from an action, investment, or decision, quantifiable in terms of money.

Perverse Incentives

Incentives that have unintended and undesirable results, contrary to the interests of the incentive makers.

Aid to Families

Financial or material support provided to families, often by the government, to help them meet their basic needs or improve their living conditions.

Adverse Selection

A situation in which one party in a transaction has more information than the other, typically leading to an inefficient market outcome.