The Dividend Decision Is Whether to Pay_____ or _____ for Growth

question 43

Multiple Choice

The dividend decision is whether to pay_____ or _____ for growth, both of which benefit stockholders.

• A)cash dividends or retain earnings
• B)cash or bonuses
• C)stockholders in cash or issue new stock
• D)stock dividends or hold onto cash

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Definitions:

Framing Error

A cognitive bias where people make decisions based on the way information is presented rather than just the facts themselves.

Lack-of-participation Error

A mistake or oversight that occurs when not all relevant parties are involved in a decision-making process, leading to potential biases or incomplete information.

Escalation Error

Escalation Error refers to the phenomenon where individuals or groups continue to invest in a decision despite new evidence suggesting it may be wrong, often due to sunk costs or ego.

Decision-making Process

A series of steps undertaken by individuals or organizations to select the best course of action among several alternatives.