When a Firm Begins to Pay Dividends, It Is Signalling

question 14

True/False

When a firm begins to pay dividends, it is signalling that it always expects to have enough cash flow to maintain and increase its dividend payout.

---

Definitions:

Budget Deficit

The situation where a government's expenses exceed its revenues over a specified period of time.

Budget Surplus

A financial situation where a government's income exceeds its expenditures over a given period.

Long-Run Growth

The sustained upward trajectory in the economy's output over time, reflecting long-term increases in productivity and capacity.

Closed Economy

A closed economy is one that does not engage in international trade of goods and services, nor does it allow for capital flows from abroad.