If a Firm Adheres Strictly to the Residual Dividend Policy

question 36

Multiple Choice

If a firm adheres strictly to the residual dividend policy, the issuance of new common stock would suggest that

• A) the dividend payout ratio is increasing.
• B) no dividends were paid during the year.
• C) the dividend payout ratio is decreasing.
• D) the dollar amount of investments has decreased.
• E) the dividend payout ratio has remained constant.

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Definitions:

Positive Reinforcement

The process of encouraging a particular behavior by offering a reward or positive outcome following that behavior.

Secondary Reinforcement

A form of reinforcement that involves the use of a stimulus that has acquired its reinforcing properties through its association with a primary reinforcer.

Punishment

In behaviorism, an intervention that decreases the likelihood of the behavior that it follows by introducing an unpleasant stimulus or outcome.

Positive Reinforcement

is a behavioral strategy that involves rewarding a desirable behavior to increase the likelihood of its recurrence.